Will Studio Dragon, the producer of the returning drama 'Wonjo Matjip', see its stock price rise?

[Asia Economy Reporter Ji Yeon-jin] Drama production company Studio Dragon's stock price has remained stagnant for a long time due to a shortage of works compared to the average this year and sluggish growth caused by tentpole (blockbuster) projects. However, attention is focused on whether the corporate value will rise as the number of broadcasts is expected to increase significantly next year.

According to the financial investment industry on the 26th, Studio Dragon's Q4 performance this year is expected to reflect dramas such as Hometown Cha-Cha-Cha, High Class, Hometown, Bad and Crazy, parts of Bulgasal, Melancholia, Happiness, and Inspector Joy.

Although the number of TV scheduled works was large, Hometown Cha-Cha-Cha, Bulgasal, and Bad and Crazy, which were simultaneously broadcast and sold on global OTT platforms, have a high proportion of episodes reflected in Q3 this year and Q1 next year, so the contribution to Q4 performance is analyzed to be small. Accordingly, Q4 sales this year are expected to decrease by 3.4% year-on-year to 133 billion KRW, and operating profit is expected to increase by 124.1% to 10.3 billion KRW. This is a conservative estimate compared to the average operating profit margin of 13.6% up to Q3 this year.

An increase in the number of scheduled works is expected next year. Among the 120 works Studio Dragon is planning and developing, only those confirmed for scheduling include 22 for TV, 6 for TVING, and more than 8 for global OTT platforms. Although the number of broadcasts was only 26 in 2020 and 25 this year, at least 31 to 33 broadcasts are expected next year.

It is also expected to differentiate itself among domestic production companies through overseas local productions. It plans to produce original content with the US production company SKYDANCE and Apple TV+. US dramas generally have production costs 5 to 10 times larger than domestic dramas, so a steep growth of Dragon's top line is anticipated. Shin Eun-jung, a researcher at DB Financial Securities, said, "The tentpole and anticipated works that were lacking this year are massively lined up next year," adding, "We maintain the earnings forecast and target stock price of 134,000 KRW based on works such as Hwanhon (Hong Sisters), Island (webtoon), After School War Activities (webtoon), Our Blues (writer Noh Hee-kyung), and The Glory (writer Kim Eun-sook)."

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