[Click eStock] "Skylife, The Key Is Whether Profitability Improves"

[Asia Economy Reporter Minji Lee] IBK Investment & Securities maintained its buy rating and target price of 11,000 KRW for Skylife on the 19th.

Since the fourth quarter of last year, the inclusion of HCN as a consolidated subsidiary significantly increased the scale of performance. Due to the rise in channel viewership rankings and the resulting increase in advertising revenue, the total consolidated sales for this year reached 763.1 billion KRW, up 46.6% on a cumulative basis. Operating profit increased by 10.9% to 63.1 billion KRW.

Jangwon Kim, a researcher at IBK Investment & Securities, said, “The addition of cable TV subscribers following satellite subscribers created a synergy effect that led to an increase in internet and mobile subscribers and revenue,” adding, “We also confirmed the results of the success of drama content.”

The important factor going forward is qualitative improvement. This is because the improvement in profitability was not significant compared to the increase in scale. The cumulative operating profit margin for the third quarter was 8.3%, down 2.7 percentage points compared to the same period last year, and net profit and EBITDA showed similar trends.

To compensate for the loss of satellite OTS subscribers, marketing was strengthened solely for satellite, resulting in an increase in subscribers; however, overall cost burden increased as expenses exceeded that growth. Considering the nature of the business, where costs to maintain subscribers and services are linked to sales scale, maintaining the current marketing strategy will make profit improvement difficult.

Jangwon Kim of IBK Investment & Securities said, “While we understand the difficulties of marketing in the pay-TV market led by IPTV, at the point when the M&A effect ends, revising the marketing strategy seems inevitable to improve profitability,” adding, “Various strategies utilizing subscriber platforms involve costs, so efficient and optimized cost execution capabilities must be demonstrated.”

Finally, researcher Jangwon Kim analyzed, “A follow-up event is needed to continue the two favorable factors of M&A and the release of popular drama content,” and “If efficient cost execution is combined with quantitative growth, profit improvement is expected.”

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