D&C Media Anticipates Benefits from KakaoPage's Overseas Expansion in the Second Half of the Year

Kiwoom Securities Report
"Growth Expected from KakaoPage's Strengthened Overseas Operations"

[Asia Economy Reporter Minji Lee] Kiwoom Securities stated on the 27th that D&C Media is expected to show concurrent growth with KakaoPage's overseas expansion.

D&C Media is a webtoon and web novel content provider (CP) company that holds the largest number of contracted writers and works in Korea. Its revenue recognition structure aggregates the payment amounts from users who access through the client company's platform as sales, and pays a certain percentage of the sales amount as platform fees.

The main client is KakaoPage, the second largest shareholder. KakaoPage has supplemented the drawbacks of the weekday webtoon-centered revenue model, which was the existing industry trend, by establishing a revenue-intensive business model based on content monetization (Wait and See Free Service). It selectively supplies excellent works through professional CP companies and leverages strong marketing power to gain an advantage over other platforms.

D&C Media's sales last year amounted to 42.1 billion KRW, a 28% increase compared to the same period last year. Since starting business in 2002, it has achieved an average annual sales growth rate of 39%. Last year's estimated sales composition by business division was 83% e-books and 17% paper books. KakaoPage accounted for about 47% of total sales last year.

Kiwoom Securities analyst Sangpyo Kim explained, "The significant increase in sales is directly benefiting from KakaoPage's sales growth due to the increase in domestic webtoon and web novel users," adding, "It is also positive that a stable high-growth revenue structure has been established based on the cumulative effect of content sales."

D&C Media's overseas sales last year were 4.7 billion KRW, a 165% increase from one year earlier. In the first quarter, it was 1.9 billion KRW, growing 205% over the same period. As KakaoPage plans to start overseas operations in the second half of this year, concurrent growth is expected for D&C Media. KakaoPage plans to enter overseas markets with Japan as the main global target base in the second half. Additionally, it intends to expand sales channels to North American markets beyond Asia, including China, Taiwan, and Thailand.

Kiwoom Securities analyst Sangpyo Kim said, "D&C Media is the number one company in terms of the number of bestsellers on KakaoPage, and its sales proportion on KakaoPage continues to increase," adding, "Considering the past stable growth trend in sales, future performance growth rates will be determined by the overseas business results of the largest client."