Studio Dragon Continues 'Strong Performance' Driven by Increased Overseas Sales
Shinhan Financial Investment Estimates Q2 Operating Profit at 17.7 Billion KRW, a 64.4% Increase Year-on-Year
[Asia Economy Reporter Kum Boryeong] Studio Dragon is expected to show solid performance as overseas sales continue to increase.
According to Eugene Investment & Securities on the 10th, Studio Dragon's first-quarter results showed sales of 120.3 billion KRW and operating profit of 11.6 billion KRW, in line with market consensus (11.1 billion KRW). Sales and operating profit grew by 7.6% and 5.5% year-on-year, respectively. Sales revenue increased by 19.1%, driving top-line growth, and overseas sales rose by 23.9%, with operating profit also increasing due to price hikes for online video service (OTT) sales.
Studio Dragon is expected to be the biggest beneficiary of the expanding domestic content demand from global media platforms. Sangwoong Han, a researcher at Eugene Investment & Securities, said, "Studio Dragon’s production volume this year is expected to increase by five titles compared to last year. These works are likely to be supplied in forms such as terrestrial broadcasting and OTT originals. Since the overseas sales prices of the company’s content are on an upward trend, sales revenue growth is expected to continue along with diversification of supply countries." He added, "While content production in major global countries has been halted due to the recent COVID-19 pandemic, domestic content production is proceeding without disruption. Therefore, there is a high possibility that global media platforms will source domestic content. The company is the top domestic content producer and is expected to be the biggest beneficiary in the overseas competition to secure Korean content."
Shinhan Investment Corp. expects Studio Dragon’s consolidated operating profit for the second quarter to reach 17.7 billion KRW, a 64.4% increase year-on-year. Sales are also estimated to rise 11.2% to 142.6 billion KRW. Sejong Hong, a researcher at Shinhan Investment Corp., explained, "Thanks to 'The King: Eternal Monarch,' this quarter is expected to see improved profitability. Domestic and overseas licensing sales will be maximized, resulting in the highest profitability since the third quarter of 2018. Sales to Netflix are expected to continue strong growth compared to last year."
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He continued, "Netflix sales this year are expected to increase by 69.8% even excluding originals. The increase in sales volume is accompanied by a rise in average selling price (ASP). We plan to supply the largest volume in line with Netflix’s urgent demand for content in the second half of the year." He added, "The corporate value of domestic content is rapidly rising. Following telecom companies, internet platforms holding intellectual property rights (IP) are also in urgent need to invest in content to compete against YouTube and Netflix."
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