[Click e-Stock] "DearU Targets the 'Core' of the K-pop Industry... Target Price Set at 48,000 Won"

Resumption of Coverage with a "Buy" Investment Rating

On March 24, Korea Investment & Securities resumed coverage of DearU, describing the company as the "core puzzle of K-pop" with a target price of 48,000 won and a "Buy" investment rating.

Jung Hoyoon, an analyst at Korea Investment & Securities, stated in a report released on the same day, "The foundation of the entertainment market lies in the attachment that fans have toward artists. The most fundamental business models in the entertainment industry, such as album purchases and concerts, also originate from this fan attachment to artists. The recent rapid growth in business segments like MD (merchandise), fan clubs, and platform royalties underscores the increasing importance of fans in the current industry."

In the fourth quarter of last year, DearU had 2.04 million subscribers, a 7.4% increase compared to the same period a year earlier but a 6.8% decrease from the previous quarter due to factors such as some artists joining the military. However, sales reached 23.8 billion won, up 33.9% year-on-year and 6.7% quarter-on-quarter. This is attributed to the subscription fee hike implemented in the third quarter and the effects of a stronger exchange rate. Jung noted, "From this year, the number of artists joining QQ Music Bubble, released through collaboration with TME, is expected to increase, leading to a growth in subscribers. China has already had the highest proportion of subscribers for the existing Bubble service, so with more C-pop artists joining, the number of subscribers and revenue for QQ Music Bubble are also anticipated to grow."

However, the report also highlights the need to focus on the potential for expanding revenue sources, such as future improvements in cost structure and diversification of revenue models. The launch of the Bubble 'Webstore' in July of last year is expected to help improve profitability. Jung explained, "While the app requires a 30% fee to Google and Apple, the webstore only incurs payment gateway (PG) fees, so a higher proportion of webstore usage should further enhance profitability. Additionally, DearU is also expanding new businesses that can increase ARPU (average revenue per user), such as the Bubble Font subscription service, which offers artists' handwritten fonts, and digital MD (merchandise) businesses."

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