[Click eStock] "DearU, Expected to Renew Quarterly Record High Performance"

On the 5th, Kiwoom Securities maintained a buy rating and a target price of 68,000 KRW for DearU, stating that the effects of the world tour will be reflected through Universe-oriented artists and the China Android service in the first half of this year, as well as the establishment of a joint venture (JV) in Japan in the second half for bubble for Japan.

DearU's revenue for the first quarter of this year is expected to reach 17.9 billion KRW, a 53.3% increase compared to the same period last year, and operating profit is projected to be 5.9 billion KRW, up 83.9%, in line with consensus estimates.

Namsoo Lee, a researcher at Kiwoom Securities, explained, "The average subscription level in the first quarter is expected to have exceeded 2 million," adding, "The first quarter was driven by the world tours and comebacks of Stray Kids, NCT 127, and NCT Dream, and the launch of EXO Baekhyun's Bubble seems to have led to an increase in subscription levels."

He continued, "Additionally, new IP expansions for Universe-oriented intellectual properties (IP) such as IVE, Monsta X, and The Boyz have occurred, and the harmony between existing and new artists is expected to significantly improve profitability."

This year is expected to see the largest scale K-pop world tour. Compared to last year, both the number of world tour stops and the audience size per stop are increasing simultaneously, dramatically improving the connection with fandoms. Considering the subscription level increases due to concerts by artists who have been active in world tours since the second half of last year, the world tour effect this year is expected to expand from major IPs to all IPs, contributing to performance improvements throughout the year.

Furthermore, rising expectations for concerts in China are also a positive factor. As of the fourth quarter, Bubble showed a country-wise market share of 36% in China, 22% in Korea, and 14% in Japan. The China Android service started at the end of January, and after a stabilization period, participation from the Chinese fandom is expected to grow further. Similar to the world tour, the resumption of concerts in China is expected to provide a clear point of performance improvement.

The researcher stated, "Regarding platform operations, the risk of not having affiliated artists is expected to be naturally resolved as artists become locked in to maintain the relationship between artists and fans with the increase in subscription numbers," adding, "The entry of overseas IPs starting from Japan proves Bubble's global service capabilities and success, and additional global developments are anticipated."

He also added, "Moreover, depending on the outcome of the SM acquisition battle, mid- to long-term platform collaboration with Kakao has become possible," and "An upgrade in vulnerable areas such as development, servers, and IT infrastructure is expected."

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