[Click eStock] "Studio Dragon, Earnings Outlook in Line with Expectations... Anticipated External Growth"
DB Financial Investment maintained a buy rating and a target price of 75,000 KRW for Studio Dragon on the 11th, stating that its earnings are expected to meet consensus estimates.
Studio Dragon's third-quarter revenue this year is projected to be 171.5 billion KRW, down 25.1% year-on-year, and operating profit is expected to decrease by 7.6% to 17.5 billion KRW. The operating profit is anticipated to align with the market estimate of 18.1 billion KRW.
Although the total number of episodes aired in the third quarter is about 68, significantly reduced from 160 episodes in the same period last year, the inclusion of tentpole works such as Dojeok and Aramun's Sword this quarter is expected to minimize the decline in performance compared to the previous year.
Additionally, most works scheduled for TV airing, including Kyungsomun 2 and Soyong-eop-eo Geojitmal, have completed overseas rights sales, which is analyzed to be positive for margin improvement. Originals such as Dojeok, Big Door Prize, and Lee Doo-na were also included.
In the fourth quarter, the number of episodes to be aired is expected to be around 80, smaller than the 101 episodes in the same period last year, but clear profitability improvement is anticipated compared to the previous year due to tentpole originals and simultaneous airing sales content. Scheduled titles include Sparkling Watermelon, Diva of the Deserted Island, Sweet Home 2, and Kyungsung Creature. Reflecting this, fourth-quarter revenue is forecasted at 179.6 billion KRW, with operating profit at 13.6 billion KRW.
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Shin Eun-jung, a researcher at DB Financial Investment, explained, "So far, the TV advertising recession, limited increase in recoup rates of scheduled works, reduction in scheduling, and topline decline have been disappointing. However, from 2024, with local production and airing in Japan, increased recoup rates for Netflix originals, and the airing of tentpole titles such as The Queen of Tears, Ask the Stars, Sweet Home 3, and Kyungsung Creature 2, dependence on captive markets is expected to decrease while external growth continues."
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