[Click eStock] "Kidari Studio, 2Q Earnings Surprise... Cost Burden Expected to Increase"

[Asia Economy Reporter Myunghwan Lee] Shinhan Financial Investment announced on the 5th that it maintains a buy rating on Kidari Studio but lowers the target price from the previous 18,000 KRW to 16,000 KRW. This is due to the inevitable valuation adjustment of growth stocks following the base interest rate hike, despite the company recording a second-quarter earnings surprise this year.

Kidari Studio's consolidated sales for the second quarter of this year grew 65.5% year-on-year to 51.7 billion KRW, and operating profit increased by 282% to 7 billion KRW. The operating profit significantly exceeded Shinhan Financial Investment's estimate of 3.3 billion KRW. It is evaluated that strong performance was recorded as the results of CPs (Contents Providers), including ByteDance, were reflected. CP sales amounting to 17.8 billion KRW, including Kidari Studio (8.4 billion KRW) and Lezhin Comics (9.4 billion KRW), were included in the second-quarter results, and the high profitability of CPs offset the increase in costs.

Shinhan Financial Investment evaluates that the headquarters, as well as Lezhin Comics, show solid growth in payment amounts and subscriber numbers. The sales of the headquarters and Lezhin Comics in the second quarter of this year increased by 96.8% and 53.7%, respectively, compared to the same period last year. Bomtoon’s quarterly payment amount surpassed 10 billion KRW for the first time, and the cumulative number of subscribers exceeded 6 million.

Lezhin Comics achieved 33.9 million subscribers and sales of 27.6 billion KRW. It is evaluated that IPs, which were previously concentrated on female audiences, have expanded to male audiences. However, it is analyzed that cost burdens such as an increase in the number of works, rising labor costs, goodwill amortization, and increased commission fees have expanded. Lezhin Comics’ operating expenses in the second quarter of this year were 44.7 billion KRW, up 51.5% year-on-year. Shinhan Financial Investment forecasts that cost burdens will continue in the third quarter due to IP acquisition, platform expansion, and increased translation costs.

Researcher Byunghwa Lee of Shinhan Financial Investment said, "The strong performance in the second quarter this year is the power of CPs," and added, "With the increased contribution of overseas CPs including ByteDance and additional CP contracts, stock price revaluation and valuation multiple upgrades are possible."

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