Chai Communication

Chai Communication is an independent digital advertising agency founded in 2004 that listed on KOSDAQ in September 2024 through a SPAC merger.

It provides integrated marketing services centered on digital brand campaigns, performance marketing, and digital content production, covering everything from campaign strategy to production, media operation, and performance analysis.

Its main revenue comes from advertisement production, such as broadcast and video campaigns, and media agency fees earned as commissions on ad spend across channels. In H1 2026, revenue by segment was split between media agency services at 48.7%, ad production at 39.6%, and other at 11.7%.

Over the same period, total handling volume reached 104.3 billion won, comprising 78.8 billion won in brand handling and 11.7 billion won in performance handling.

On a standalone basis, 97.3% of media agency revenue comes from direct contracts with advertisers, and no single client accounts for more than 10% of revenue, indicating a fairly diversified client base.

In June 2025, the company consolidated TheSC, which mainly conducts medical-institution marketing agency work and distributes medical devices and cosmetics, and TheSC runs digital marketing operations in Japan, China, Thailand, and Indonesia as well as domestically.

The company also operates a proprietary generative-AI content platform along with trend and performance analytics tools, and has unveiled an AI-based advertising concept agent called 'Ai-CEPT' as it expands into AI marketing solutions.

South Korea's digital ad agency market features competition between numerous small independent agencies and large integrated ad houses, and the company is positioning itself around combined brand-performance execution capability paired with a healthcare/beauty-focused subsidiary.

2025 consolidated operating profit rose 24.5% year on year to 4.4 billion won, revenue grew 13% to 66.5 billion won, and net income turned positive at 2.5 billion won, with owner net income at 1.2 billion won.

In 2024, despite revenue of 58.8 billion won and operating profit of 3.5 billion won (a 6.0% margin), one-off costs tied to the prior year's listing preparation pushed owner net income into a 0.3 billion won loss.

In 2023, revenue was 56.4 billion won with operating profit of 8.6 billion won (a 15.3% margin) and owner net income of 7.3 billion won, the strongest profitability of the three years, though this reflects a pre-listing period best treated as reference data.

On a quarterly basis, operating profit was only 0.3 billion won in Q2 2025, but H1 2026 consolidated revenue reached 45.6 billion won and operating profit 1.9 billion won, up 101% and 137% year on year respectively, with seasonal advertising strength showing through in Q3 (revenue 11.5 billion won, operating profit 1.2 billion won) and Q4 (revenue 23.4 billion won, operating profit 2.5 billion won).

In contrast, Q1 2026 posted revenue of 19.2 billion won alongside an operating loss of 0.9 billion won and an owner net loss of 1.0 billion won, reflecting clear seasonal weakness, and while Q2 2026 returned to an operating profit of 2.8 billion won on revenue of 26.4 billion won, owner net income swung to a loss of 1.1 billion won, highlighting a gap between operating results and the bottom line.

Summed over the most recent four quarters from Q3 2025 through Q2 2026, operating profit totals roughly 5.5 billion won while owner net income remains a loss of about 1.0 billion won, indicating that the operating-level recovery has not yet fully carried through to final earnings.

On a standalone basis, H1 2026 revenue was 28.4 billion won with operating profit of 0.8 billion won, and despite scaling back non-core leasing as the company prepared to relocate to its integrated headquarters, growth in ad agency revenue kept operating profit near the prior-year level. The debt ratio rose from 132.9% in 2023 to 208.1% in 2024 before easing slightly to 191.3% in 2025.

South Korea's digital ad agency market has a seasonal pattern in which budget execution concentrates in the second half, and because advertiser budget execution is weighted toward H2, orders secured in H1 tend to be recognized as H2 results, often producing a first-half-weak, second-half-strong pattern across the industry.

The competitive landscape features large integrated ad houses alongside numerous small and mid-sized independent agencies, and Chai Communication positions itself around a full-stack structure that executes brand campaigns and performance marketing within one organization.

In the beauty and healthcare marketing segment, medical and beauty marketing is viewed as a high-value-added area requiring capability to navigate advertising regulations, with growing K-beauty demand across Asia underpinning growth for related firms.

Separately, KOSDAQ-wide listing-maintenance requirements have been tightening in stages: from July 2026, the KOSDAQ market-cap maintenance threshold rose to 20 billion won, a sub-1,000-won price rule was added, and issues falling short for 30 or more trading days are designated administrative issues.

Authorities also introduced a Konex transfer-listing option and pushed back the timing of a further hike in the market-cap threshold to 30 billion won.

These regulatory shifts broadly affect small-cap KOSDAQ names, and media/entertainment small caps such as this one remain in an environment of ongoing compliance monitoring.

In its mid- to long-term corporate value-up plan announced in late July, the company laid out tasks including strengthening its core digital advertising competitiveness, expanding AI-based new businesses, improving finances and governance, and enhancing investor communication.

On the core-business side, it plans to strengthen content commerce and data platform capabilities, expand inner-beauty/health commerce and beauty operations through TheSC, and commercialize its proprietary AI integrated marketing platform while extending it into a software-as-a-service offering.

On the finance and governance side, it plans to phase in share buybacks and dividend policy review as earnings improve, targeting a 76.9% compliance rate on core corporate-governance indicators by 2028.

Management has said it intends to strengthen its core business on the back of secured H2 orders and seasonal advertising strength while progressively pursuing new growth areas such as AI-based marketing and content commerce.

On the overhang-management front, a call-option exercise window for the full face value of the second convertible bond opens from October 22 to November 2, 2026, and the 10 billion won third convertible bond issued in April 2026 also carries a full call option for the issuer, making the actual exercise of these options a key factor for easing dilution concerns going forward.

Sell-side commentary has noted that as TheSC's results are reflected on a full-year consolidated basis, the business portfolio should diversify and mid- to long-term visibility on overall earnings growth should improve.