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(Yonhap Feature) Theaters abuzz with return to pre-pandemic level

Economy 07:22 July 02, 2021

By Chung Joo-won

SEOUL, July 2 (Yonhap) -- South Korean movie theaters are moving towards a rebound this summer, as blockbusters return to local theaters amid progress in vaccinations around the globe.

Movie stocks recovered much of their losses from the pandemic on expectations that several Hollywood mega-projects by Disney, Sony and Warner Bros. would roll out in the June-August peak season.

CJ CGV, the country's largest theater chain, closed at 30,200 won (US$26.92) per share on the main bourse Thursday, soaring 20 percent from 25,200 won on the final day of last year. The cinema chain closed at 32,850 won on Jan. 20 last year, when South Korea reported its first confirmed COVID-19 case.

Jcontentree Corp., the operator of multiplex chain Megabox, closed at 47,550 won Thursday, a 25.3-percent gain so far this year, even surpassing the pre-pandemic level. The country's third largest theater chain closed at 40,750 won on Jan. 20 last year.

(Yonhap Feature) Theaters abuzz with return to pre-pandemic level - 1

Their stock rally came despite COVID-19 concerns, largely due to market optimism for a turnaround in the second half of the year.

"Movie theaters showed a relatively slow recovery in the first half, although the country's vaccination campaign began in late February, due to the lack of global-scale hits," said Yoo Sung-man, an analyst at Leading Investment & Securities Co.

"But so many global blockbusters are set to launch in the second half and local blockbusters are left to wait for their turn -- the turnaround will most likely start in the third quarter," he said.

KB Securities estimated CJ CGV's revenue in the July-September period at 315.3 billion won, nearly double the 176.1 billion won estimate during the April-June period.

The figures mark a change from the widespread pessimism at the end of 2020.

In 2020, CJ CGV reported 583.4 billion won in annual revenue, but suffered an operating loss of 392.5 billion won. Lotte Cultureworks, the country's second largest cinema chain, logged 266 billion won in sales, and an operating loss of 161 billion won. Jcontentree registered 363.9 billion won in sales, and booked an operating loss of 56.8 billion won.

This image provided by Walt Disney Company Korea shows a scene from "Black Widow." (PHOTO NOT FOR SALE) (Yonhap)

Box office ticket sales stood at about 20 million so far this year, with the monthly figure jumping from 1.8 million in January to 5 million in June, according to the Korean Film Council (KOFIC).

Monthly ticket sales are expected to double in July from the previous month, according to cinema operators.

Half of last year's most viewed films at the South Korean box office launched during the summer peak season.

Local cinema franchises said they have "exceptionally high hopes" for the launch of Marvel blockbuster "Black Widow" next week, hailing the first film of the Marvel phase 4 that had been stalled for more than a year due to the pandemic. Three more Marvel films are expected to launch in the second half.

"We are seeing signs of change. Tickets completely sold out for the first two days of 'Black Widow'," said CG CGV spokesperson Hwang Jae-hyun, calling the booking a rare phenomenon in the pandemic era.

CG CGV is considering increasing the number of runs per screen close to the pre-pandemic levels, as more moviegoers are expected to return to the summer cinema, Hwang said.

Hollywood hits "Hitman's Wife's Bodyguard" and the ninth installment of "Fast and Furious" series set the ground for this summer. After "Black Widow" come other mega projects, including "Cinderella," "The Suicide Squad" and homegrown blockbuster "Sinkhole."

This photo provided by CJ CGV shows its drive-in theater. (PHOTO NOT FOR SALE) (Yonhap)

Brokerages said local movie theaters still have challenges to cope with.

"Key risks (for the cinema chains) are the competition with global streaming services and the potential spreading of the new coronavirus variants," KB Securities analyst Lee Dong-ryun said. Their high debt ratio is another risk for the ailing industry, he said.

But the brokerage consensus is that the movie theaters' cost-cutting efforts and price hikes would outweigh such risks.

Top movie multiplex chain CG CGV raised its ticket prices by 1,000 won in April, with Lotte Cinema and Megabox following suit in June.

Last year, 81 movie theaters closed nationwide due to the pandemic's plight, marking the largest yearly fall since the global financial crisis in 2008.

jwc@yna.co.kr
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