[Click eStock] "SBS Expects Operating Profit for Next 2 Years Due to Wave Investment Expansion... Target Price Up"

[Asia Economy Reporter Koo Eun-mo] Hana Financial Investment forecasted that SBS is expected to generate significant operating profits over the next two years as wavve's investment expansion and sports events, which were conservatively accounted for, reflected a substantial portion of impairment losses as non-operating expenses. The investment opinion was maintained as 'Buy,' and the target price was raised to 32,000 KRW.

On the 10th, Lee Ki-hoon, a researcher at Hana Financial Investment, stated in a report that due to conservative accounting, significant profits are expected from both the Olympics and the World Cup. The researcher noted, "One of SBS's biggest drawbacks was that most sports events related to broadcasting rights for the Olympics and World Cup were running at a loss, and with the consecutive Tokyo 2021 Olympics, Beijing 2022 Olympics, and Qatar World Cup, it was a burden on future performance."

However, he explained, "Through the audit in the third quarter following the split of Taeyoung Construction, 96.5 billion KRW (83% of the total 116 billion KRW) of broadcasting rights (broadcast content assets) fees were reflected as impairment losses," adding, "Due to excessively conservative accounting compared to future rights, even if only the joint broadcasting rights with MBC and KBS (about 60-70%) are reflected, the remaining cost of broadcasting rights is minimal, so significant profits are expected even from the Tokyo Olympics." He evaluated, "Although this was pre-emptively accounted for as non-operating expenses, making it a case of robbing Peter to pay Paul, from an investor's perspective, the operating profit for 2022 is expected to improve."

Active investment in wavve is also a positive factor. One of the reasons for the strong performance in the third quarter was that the drama 'Alice' was sold as a wavve original, and in the fourth quarter, 'Fly, Gaechun-yong' was also sold. The researcher predicted, "Due to tight drama supply within the industry and aggressive investment plans by tving, sales to wavve and the recoupment rate are expected to increase," adding, "SBS's drama scheduling plan for next year is at a similar level to this year and still within cost control, but with steady recovery in TV advertising, sales of wavve originals, expansion of the recoupment rate, and the seasonal series of 'Penthouse' exceeding 20% viewership, operating profit is expected to improve to around 70 billion KRW."