[Click eStock] "DearU, Despite Subscriber Growth, Impacted by Macro Economic Risks"…Target Price Lowered

[Asia Economy Reporter Lee Jung-yoon] Kiwoom Securities on the 20th downgraded the target price of DearU from the previous 67,000 KRW to 60,000 KRW, stating that although momentum such as the effect of entering the Chinese Android market and the onboarding of global stars remains strong, the subscription market is likely to be affected due to macroeconomic risks. However, the buy rating was maintained.

DearU's sales for the second quarter of this year are expected to increase by 34% year-on-year to 12.7 billion KRW, and operating profit is forecasted to rise by 32% to 4.5 billion KRW. The number of subscriptions recorded 1.3 million at the end of the first quarter, and it is judged that growth will continue in the second quarter due to the concert effects of Twice and NCT127. In particular, additional subscriber growth may occur in the second half of the year when K-POP artists' concerts are actively held. Operating expenses will reflect annual fixed labor costs, one-time incentives, and costs for new service development personnel compared to the first quarter, but margin erosion is not expected to be significant.

In the third quarter, effects from Bubble Live, Fan Gift, and the launch of the Chinese Android version are anticipated. The fourth quarter is expected to see continuous expansion of domestic celebrities including idols, sports figures, MCNs, and actors, as well as the onboarding of overseas artists. New subscribers from the Chinese Android market are expected to at least exceed the level of Chinese iOS subscribers, and expanding from a market limited to iPhone to Android is projected to enable performance growth through increased subscriptions.

Namsoo Lee, a researcher at Kiwoom Securities, explained, "Momentum that can outperform predictions, such as the effect of entering the Chinese Android market and onboarding of global stars, remains strong. Also, starting with Bubble Live, various fan gift strategies can be implemented, and subscription growth due to world tours by SM and JYP artists will be steady."

He added, "By knocking on the Chinese market and onboarding global artists, various strategies are being implemented, and the subscription trend of low in the first half and high in the second half will prove the robustness of the fundamentals. However, it is also true that the possibility of a level-down in the subscription market due to macroeconomic risks has increased."

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