[Click eStock] "Studio Dragon, 1Q is a warm-up... Operating profit growth rate ↑ from 2Q"

[Asia Economy Reporter Lee Myunghwan] Meritz Securities announced on the 19th that it expects Studio Dragon's operating profit to increase in the second quarter and maintains a buy rating and a target price of 128,000 KRW.

Meritz Securities forecasts Studio Dragon's consolidated sales for the first quarter of this year to be 118.8 billion KRW, a 1.5% increase compared to the same period last year, and operating profit to be 19 billion KRW, a 6.4% increase year-on-year. This figure is similar to market expectations and is explained by the revenue related to the drama 'Jirisan,' which aired in the fourth quarter of last year, being deferred to the second quarter and beyond. However, estimates for profits from existing projects were slightly revised upward. Operating profit is linked to the sale of license rights for works holding intellectual property (IP), and the number of IP-held works in the first quarter was 3.4, a 29% decrease compared to the same period last year.

From the second quarter, strong performance is expected due to new releases. Meritz Securities pointed out that from the second quarter onward, collaborations between blockbuster projects that guarantee profitability and older works with already reflected costs and high profit margins are anticipated. Following the drama 'Our Blues,' which began airing in April, and 'Alchemy of Souls' in June, all are major productions with estimated production costs of about 30 billion KRW. Disney's online video service (OTT), 'Disney Plus,' will release the long-prepared new work 'Moving' in the second half of the year, and Meritz Securities expects a large purchase of older works to retain demand from viewers who subscribed to watch the new release to occur within the second and third quarters. Researcher Lee Hyojin of Meritz Securities predicted, "From the second quarter, blockbusters and older works will strongly drive the top line and bottom line, respectively."

Lee added, "Currently, with travel resuming soon, if the supply and demand focused on reopening ease, Studio Dragon's attractiveness is expected to be significantly highlighted," and analyzed, "From the second quarter, operating profit growth is expected to be around 100%, making it a good timing to enter from a performance momentum perspective."

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