[Click eStock] "Studio Dragon, Limited Impact of COVID-19 Until Q2"

Korea Investment & Securities Issues 'Buy' Rating and 100,000 KRW Target Price... Closing Price on 18th at 73,700 KRW

[Asia Economy Reporter Kum Boryeong] An analysis suggests that the impact of the novel coronavirus disease (COVID-19) on Studio Dragon will be limited until the second quarter.

According to Korea Investment & Securities on the 19th, Studio Dragon's first-quarter sales this year are expected to be 109.5 billion KRW, with an operating profit of 11 billion KRW, in line with market consensus. Sales are projected to decrease by 4.2% compared to the previous year.

Oh Taewan, a researcher at Korea Investment & Securities, explained, "The operating profit estimate is similar to the previous estimate. The number of scheduled dramas is 7.2, an increase of 0.5 compared to last year, but sales slightly decrease due to the absence of new blockbuster productions. However, due to increased domestic demand for video on demand (VOD) caused by COVID-19 and growth in content exports, the proportion of sales revenue will increase, leading to a slight improvement in operating profit margin."

The analysis indicates that the impact of COVID-19 will be limited until the second quarter because the programming lineup has already been finalized. The only risk is a delay in broadcasting caused by confirmed cases in the production team leading to suspension of filming.

From the third quarter, a slowdown in the economy is likely to lead to reduced corporate advertising budgets, which in turn may result in cuts to drama budgets by broadcasters. Researcher Oh said, "We have lowered our earnings estimates to reflect this, but rapidly increasing sales to global over-the-top (OTT) services will support the lower end of performance. OTTs are based on individual subscription fees, so the impact of economic slowdown is limited, and they are purchasing domestic content at a recoup rate 10-15% higher than last year."

Korea Investment & Securities has given Studio Dragon a 'Buy' investment rating with a target price of 100,000 KRW. The closing price on the 18th was 73,700 KRW.

This content was produced with the assistance of AI translation services.