[Click eStock] "Studio Dragon Collaborates with Naver... Synergy Expected"

Daishin Securities Issues 'Buy' Investment Rating and Target Price of 115,000 Won... Closing Price on 26th at 78,100 Won

[Asia Economy Reporter Kum Boryeong] An analysis has emerged that synergy effects are expected as Studio Dragon has taken Naver, a competitor, as a partner.

According to Daishin Securities on the 27th, the day before, Naver and the three CJ Group companies decided on a strategic alliance through a stock swap. Naver exchanged 600 billion KRW of its treasury shares for treasury shares of CJ Logistics and CJ ENM, and participated in Studio Dragon's third-party allotment paid-in capital increase through a contribution in kind.

Kim Hoejae, a researcher at Daishin Securities, said, "Studio Dragon will issue new shares worth 150 billion KRW, and Naver will contribute 523,560 treasury shares as a contribution in kind. Studio Dragon will hold 0.32% of Naver's shares, and Naver will hold 6.3% of Studio Dragon's shares after the capital increase." He explained, "The reason Studio Dragon conducted the capital increase is that if CJ ENM exchanges its shares of Studio Dragon for Naver's shares, Studio Dragon would not hold any Naver shares. Therefore, Studio Dragon also needs to hold Naver's shares. Although it is only 0.32%, holding shares will strengthen the partnership."

The alliance between Naver and the three CJ Group companies is expected to bring synergy effects. Researcher Kim said, "Qualitative effects are expected. Webtoon intellectual property (IP) is a material likely to gain popularity in dramas and movies. By stably receiving Naver Webtoon IP, high-quality content production is possible." He added, "There are also quantitative effects. For CJ ENM and Studio Dragon, new platforms such as Naver TV and other global online video services (OTT) have emerged, enabling an increase in content production volume." Furthermore, Kim added, "Compared to Kakao launching KakaoTV with its own IP and emerging as a competitor to CJ ENM and Studio Dragon, this alliance brings Naver, a potential competitor, into a partnership."

Daishin Securities gave Studio Dragon a 'Buy' investment rating with a target price of 115,000 KRW. The closing price on the 26th was 78,100 KRW.