[Click eStock] "Studio Dragon, Q3 Earnings Normalize... Target Price Down 7%"

Kiwoom Securities Report

[Asia Economy Reporter Minji Lee] Kiwoom Securities maintained a buy rating on Studio Dragon on the 8th and set the target price at 130,000 KRW, down 7% from the previous level.

For the third quarter, the company's revenue is expected to reach 123.1 billion KRW, up 15.7% from the same period last year, while operating profit is forecasted to decline by 7% to 14.9 billion KRW. In the third quarter, titles such as "The Devil Judge," "Hometown Cha-Cha-Cha," "Kingdom: Ashin of the North," and "Yumi's Cells" are expected to be broadcast and sold across TV, Netflix, and TVING, contributing to improved performance. In particular, the number of Netflix launches continues to rise, and the performance contribution from content production contracts scheduled through next year is analyzed to maintain a stable trend.

Namsoo Lee, a researcher at Kiwoom Securities, explained, "Although operating profit is expected to fall short of market expectations, compared to the weak TV scheduling in the second quarter, the increase in the number of works is expected to simultaneously improve scheduling and sales revenue," adding, "It will demonstrate its strength as the largest drama house in Korea."

This year's slump can be attributed to the absence of tentpole titles like "The King" and "Sweet Home" compared to last year. The poor scheduling in the second quarter also had an impact; the company, which had shown remarkable revenue growth through captive channel scheduling and Netflix sales, experienced a revenue decline due to pre-channel scheduling. However, the content production capabilities translated into expanded sales, successfully strengthening profitability despite scheduling setbacks. The tentpole dramas planned for this year, "Twilight" and "Island," were postponed to next year, putting pressure on this year's performance decline, but next year, the tentpole titles, the reactivation of OCN, and Apple TV broadcasts are expected to drive performance improvement.

The company's strength lies in the growth potential of stable scheduling and sales performance driven by Netflix orders. Quarterly revenue and cost reflection have stabilized, improving profitability, but additional growth is expected to require top-line momentum. Researcher Namsoo Lee projected, "If new business expansions occur with Disney Plus, scheduled to launch in November, and HBO Max and Apple TV, which are considering entering the domestic market, the company will level up as an international drama production company in overseas exports."

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