[Click eStock] "Studio Dragon, 4Q Slump... Expected to Grow Significantly Next Year"

On the 6th, Samsung Securities analyzed that Studio Dragon's fourth-quarter earnings are expected to be weaker than anticipated, but a full-fledged growth trend is forecasted for next year. They maintained a 'Buy' investment rating and a target price of 61,000 KRW. Studio Dragon's closing price on the previous trading day was 42,350 KRW.

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According to Samsung Securities, Studio Dragon's fourth-quarter sales are expected to be 101.9 billion KRW, a 36.7% decrease compared to the same period last year, while operating profit is expected to turn positive at 3.7 billion KRW. Operating profit is projected to fall short of the consensus estimate (5.7 billion KRW) due to cost recognition related to some long-term programming with undecided schedules. However, profitability from simultaneous TV and OTT broadcasts and a reduction in amortization expenses are expected to contribute to profit improvement.

Studio Dragon plans to increase the number of productions by 5 to 7 compared to the previous year in 2025 and aims to establish a stable production environment through expanding various channels and collaborations. In particular, they announced key strategies including ▲restoring the tvN Wednesday-Thursday drama slot ▲expanding collaboration with KBS ▲strengthening entry into the Japanese market ▲establishing a system for discovering new talent. The elimination of inefficient practices and cost-saving effects are also expected to be fully realized starting in 2025. The company stated that it will establish a profit-sharing system with planning agencies and promote production process efficiency in line with the expanding global content demand.

Researchers Minha Choi and Younghoon Kang of Samsung Securities said, "Once production expansion and efficiency improvements are in full swing, performance improvement will become prominent from 2025."

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