DearU Aims to Capture Both Revenue and Profitability This Year... "A Smooth Path Ahead Again"

[Asia Economy Reporter Kwon Jae-hee] Hanyang Securities maintained a 'Buy' rating on DearU on the 3rd, expecting expansion of existing businesses and new ventures this year. However, the target price was lowered from 73,000 KRW to 60,000 KRW due to multiple contractions in entertainment companies and platform operators.

DearU achieved sales of 40 billion KRW and operating profit of 13.2 billion KRW last year. The net loss was 26 billion KRW, which was due to the conversion of convertible bonds (CB) and convertible preferred shares (CPS) into common stock in the fourth quarter. Excluding this one-time loss with no cash outflow, the net loss is at a level that can turn into profit.

Hanyang Securities forecasted growth in both sales and profitability for DearU this year.

The number of subscribers to DearU Bubble is still on an upward trend, reaching about 1.4 million as of early this year. This is approximately a 40% increase compared to January last year. The recruitment of new IPs and active activities of existing artists drove this growth trend.

The number of artists and celebrities increased from about 230 at the time of listing to around 280, with a goal to hold 300 IPs within the first quarter.

Minju Park, a researcher at Hanyang Securities, said, "What is noteworthy at this point is that the IPs owned by DearU are no longer limited to K-Pop artists. They are expanding their scope to sports players and creators, and by utilizing overseas artists planned as well, the platform service scalability will become even more limitless."

She added, "The gradual increase in subscriber numbers and the new 'My Home' service will be launched starting with a beta version by the end of the first half of this year."

Hanyang Securities expects DearU to continue achieving record performance by maintaining a profit trend through increases in average revenue per user (ARPU) and profitability.

Researcher Park stated, "With Google's commission rate reduction and Apple, used by 62% of users, announcing plans to apply discounts to existing commission rates in accordance with the In-App Payment Forced Prohibition Act, the potential for further profitability improvement has become more certain. The launch of the Chinese Android service is also progressing as planned."

However, she advised that attention should be paid to the overhang issue going forward. In DearU's case, a large portion of the major shareholder's shares were subject to lock-up agreements. Although the volume movement immediately after listing was limited, the 6-month and 12-month overhang supply and demand should be checked from an investor's perspective.

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