[Featured Stock] Chorokbaem, 2 Trillion KRW Market Cap Increase in Drama Production Industry if Hanhanryeong Eased... Anticipation for BTS Drama Production

[Asia Economy Reporter Park Hyungsoo] As expectations rise for the lifting of China’s ban on Korean content (Hallyu ban), Chorokbaem’s stock price is on the rise.

At 10:37 AM on the 6th, Chorokbaem was trading at 1,780 KRW, up 7.55% from the previous trading day.

Recently, as news spread that the Chinese government is formalizing the lifting of the ban on the sale of Korean group tour products, video content production companies are gaining attention.

Lee Ki-hoon, a researcher at Hana Financial Investment, explained, "The potential increase in corporate value within the drama production industry that can be realistically expected upon the easing of the Hallyu ban could reach 2 trillion KRW," adding, "Before the Hallyu ban, China’s annual import quota for Korean dramas was around 12 to 15 titles."

He continued, "Assuming no changes in related regulations, an average production cost of 15 billion KRW and a 40% recoup rate for Chinese distribution rights," and analyzed, "If the sector’s appropriate PER valuation is assumed to be 30 times upon easing of the Hallyu ban, then excluding a 25% corporate tax rate, the net value would be about 2.1 trillion KRW."

He added, "The incremental market capitalization within the industry is approximately 2 trillion KRW," but noted, "Of course, there are various variables such as the import quota possibly decreasing compared to the past, the sold works failing to pass the State Administration of Radio and Television’s censorship, or the recoup rate being less than 40%."

The researcher emphasized, "The drama production industry, with the emergence of Netflix, has seen not only increased production costs but also most major dramas being produced above the break-even point," and stated, "Upon easing of the Hallyu ban, sales of Chinese distribution rights will translate into operating profit."

Chorokbaem is pushing forward with a large-scale paid-in capital increase. The funds raised will be used to produce dramas that can secure overseas distribution rights income and IP (copyright) utilization revenue through a pre-production method. The new drama to be produced (Project X) is a pre-produced drama targeting the OTT market, planned to be produced before broadcasting station scheduling to secure IP and generate revenue by selling broadcasting rights to platform operators such as OTT services. Regarding the production of the new drama (Project X), a co-production contract has been signed with another corporation. A separate confidentiality agreement has also been executed. Chorokbaem oversees the production-related tasks and shares the revenue generated from the drama produced jointly with the co-production partner. Chorokbaem is producing a drama that incorporates the worldview of BTS together with Big Hit Entertainment, BTS’s agency.