[Click eStock] "RaemongRaein, the Most Undervalued Drama Production Company... Strong Buy"

[Asia Economy Reporter Ji Yeon-jin] Hana Financial Investment announced on the 17th that RaemongRaein is the most undervalued stock among domestic drama production companies, recommending a buy rating with a target price of 45,800 KRW. The target price was calculated by applying the average price-earnings ratio (PER) of 40.1 times for drama production companies to this year's expected earnings per share (1,141 KRW).

Choi Jae-ho, a researcher at Hana Financial Investment, stated, "In the past, it was an outsourced drama production company, but from this year, it has adopted an IP acquisition model, and explosive margin growth is expected due to the evolution of the business model (BM). Through synergy with Wysiwyg Studios Group, the IP library (pipeline) and the number of works that can be produced annually (CAPA) are expected to expand," adding, "Since the programming channels are expanding globally and there is a high possibility of new media expansion toward the metaverse, it is at the beginning of a valuation expansion phase." He continued, "In particular, this year's expected PER has fallen to 19.2 times due to profit-taking sales that have continued since the listing at the end of 2021, making it the most undervalued among domestic drama production companies," explaining, "This is why we strongly recommend buying."

RaemongRaein is a subsidiary of the comprehensive content group Wysiwyg Studios, and it is expected that the valuation premium will expand through synergy creation among group affiliates. The greatest synergy is that internal sourcing of IP among affiliates has become possible, leading to continuous expansion of the company's IP pipeline. Currently, it holds more than 30 projects with scripts prepared for 3-4 or more episodes. Considering that script work alone takes more than a year during the drama production process, the production period is reduced to less than half compared to other domestic competitors, which leads to an expansion of the number of works that can be produced annually (CAPA), confirming the synergy.

Researcher Choi said, "Along with the public offering funds raised through the listing at the end of last year, financial support is possible from the parent company Wysiwyg Studios and Com2uS, so the funds for expanding the number of productions are already prepared," adding, "This means that the goal of producing more than 10 works annually is actually achievable. Since the group has global references in North America, Europe, China, and other regions, the global export and channel expansion of content will lead to growth in the company's recoup rate."

This year, sales are expected to increase by 61.2% to 64.8 billion KRW, and operating profit is expected to rise by 106.8% to 9.1 billion KRW.

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