[Click eStock] Studio Dragon, Just a Breather... Growth Trend Remains Strong

[Asia Economy Reporter Lee Seon-ae] Kiwoom Securities announced on the 22nd that it maintains a 'Buy' rating and a target price of 140,000 KRW for Studio Dragon, as the growth trend is expected to continue.

Namsoo Lee, a researcher at Kiwoom Securities, stated, "Although a decline in sales due to somewhat sluggish programming in the second quarter is inevitable, OTT sales performance is still expected to remain solid. While the profit scale may decrease, we believe there will be no deterioration in profit margins," adding, "In the mid to long term, we expect the company to maintain its growth trend by strengthening its capacity for international drama production."

In the second quarter, dramas such as and were aired in full, but a decrease in the number of programmed works and the base effect from last year's led to projected sales of 101.8 billion KRW (yoy -36.9%) and operating profit of 15.9 billion KRW (yoy -5.9%, OPM 15.6%). Programming sales are expected to decline to 29.7 billion KRW compared to the same period last year and the previous quarter, but sales revenue is anticipated to remain steady at 63.9 billion KRW. This is attributed to consistent OTT sales performance with iQIYI's , and Netflix's , , and being serviced. Although the decrease in programmed works led to a reduction in costs and thus a decrease in operating profit scale, it is estimated that there will be no deterioration in operating profit margin.

The somewhat sluggish programming in the second quarter is expected to normalize smoothly from the third quarter, considering the programming of 16-episode series, productions for TVING, and tentpole works such as . At this critical point where efficient selection and concentration are important to prepare for explosive content expansion, the advantage of having captive channels and OTT platforms, along with the stability of supplying works to Netflix?a gateway recognized globally for quality?is expected to shine even more. Additionally, there is a very high possibility of operating leverage arising from the launch of international dramas in the mid to long term.

Researcher Lee emphasized, "It is clear that this is a period of content expansion centered on OTT," and added, "During such a time, we expect growth to continue through efficient investment execution by securing a stable number of productions via strategic selection of works by programming channel."

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