[Click eStock] DearU, Subscription Growth and Kakao Collaboration Synergy Expected

Samsung Securities announced on the 15th that it maintains a buy rating on DearU and raises the target price to 49,000 KRW. This represents an upside potential of 17.9% compared to the previous trading day's closing price.

Minha Choi, a researcher at Samsung Securities, stated, "In April, artists affiliated with Cube Entertainment joined, and the absorption effect of Universe is driving subscription growth on an annual basis. In the mid to long term, synergies from collaboration with the Kakao Group will also emerge." He added, "We are raising the target price to the pre-valuation timing level (12-month forward price-to-earnings ratio (PER) of 32 times, the average for entertainment companies)."

The consolidated sales for Q1 were 16.4 billion KRW (up 39.7%), and operating profit was 5.7 billion KRW (up 27.3%), meeting the lower end of the raised consensus (6 billion KRW). In January, DearU signed an asset transfer contract to acquire all IP rights of 'Universe,' significantly increasing the number of participating artists. Since mid-February, artists who previously provided services on Universe, such as The Boyz, IVE, and Monsta X, have joined Bubble and continued their services, naturally increasing the number of subscriptions. As a result, the average number of subscribers rose from 1.65 million in the previous quarter to 2.05 million. Along with the global fandom expansion of the participating artists, the share of China increased to 38% (up 14 percentage points) due to entry into the Chinese Android market and the launch of a simple payment service during the quarter. On the cost side, server costs increased due to the activation of Bubble Live usage, and amortization expenses of intangible assets rose due to the acquisition of Universe. As of the end of Q1, 80 entertainment agencies, 152 teams, and 469 artists are using the Bubble service.

DearU plans to establish a joint venture (JV) with the Japanese fan platform company m-upholdings and launch the 'Bubble for Japan' service. The JV establishment is expected to be completed in May, and once the payment system and other setups are finalized, the service is anticipated to launch within the year. As the fan community platform market is reorganizing into a two-strong structure, DearU is expected to accelerate its localization strategy overseas, starting with Japan. There are also plans to expand services in the second half of the year. By adding digital item services such as handwritten notes, DearU aims to increase average revenue per user (ARPU) through additional revenue generation. There is also potential for further growth through partnerships with content platforms including Kakao Entertainment’s 'Melon.'

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