The Most Marginalized Production Company 'Chorokbaem'... Producing 7 Dramas This Year

[Asia Economy Reporter Hyunseok Yoo] Chorokbaem is being analyzed as having laid the groundwork for growth this year through the production of seven dramas.

On the 4th, Ji Inhae from Hanwha Investment & Securities stated, "Among the small and medium-sized production companies that have rapidly risen since the end of last year, the most overlooked stock is Chorokbaem," adding, "Before the Big Hit IPO in September 2020, the stock surged significantly as a BTS-related stock, but afterward, the stock price declined and did not follow the trend of other small and medium-sized production companies."

However, it is evaluated that this year, Chorokbaem has laid the foundation for growth through the production of multiple dramas and rental income. He said, "The total number of dramas produced in 2021 is seven," adding, "This is more than Chorokbaem's past average of 2.8 per year and also more than other small and medium-sized production companies." He continued, "Since it operates on an outsourcing production model, it does not directly recognize overseas licensing revenue from IPs with the greatest leverage, but with ratings close to a phenomenon, profitability is estimated to be much higher than the average outsourcing production due to high profits from sponsorships and product placements (PPL), which are the pure share of outsourcing production companies."

Additionally, securing intellectual property rights (IP) is cited as an important factor. These include 'Youth,' which tells the story of BTS, and 'That Night,' starring actors Kim Soo-hyun and Cha Seung-won. He explained, "The production costs are approximately 40 billion KRW and between 20 to 30 billion KRW respectively, and they are preparing for global OTT broadcasts in the second half of the year," adding, "Although it is understood that only partial IP rights have been secured rather than 100%, it is meaningful in that they are pursuing an IP strategy for the first time."

Furthermore, securing a stable business model through subsidiaries is also considered a positive factor. He said, "In addition to broadcasting, they operate dining (subsidiary The Sky Farm) and rental businesses, including brands such as Sesangui Modeun Achim and Sadaebujip Gotgan," adding, "This internalizes revenue from in-house PPL and sponsorships." He continued, "Since the third quarter of last year, the Busan LCT Observatory business has been in full swing, and without any relation to 'development,' it is structured to generate revenue purely by renting out the observatory, generating 2 billion KRW last year, with an expected minimum annual revenue of 4 billion KRW."