[Click eStock] “SBS, Potential Highlight of StudioS Share Value”

Yuanta Securities "SBS Target Price Raised from 50,000 Won to 95,000 Won"
Capital Expansion Expected for Production Company Following Holding Company Merger

[Asia Economy Reporter Gong Byung-sun] There are expectations that the value of SBS subsidiaries' shares will be highlighted as their status changes following the merger between holding companies. This is because SBS will be freed from the legal regulation requiring it to maintain or secure 100% ownership of its subsidiaries. Yuanta Securities has raised the target price for SBS from 50,000 won to 95,000 won, maintaining a 'Buy' rating.

According to Yuanta Securities on the 9th, the merger date between SBS Media Holdings and TY Holdings is scheduled for December 28. If the merger between the holding companies takes place, the status of SBS subsidiaries will change from great-grandchildren companies of TY Holdings to grandchildren companies. SBS subsidiaries, including Studio S, will be exempt from the legal regulation that SBS must secure or maintain 100% ownership of their shares.

Last year, SBS additionally invested 20 billion won in Studio S for operating funds. Currently, Studio S's equity capital stood at 27.6 billion won as of the end of last year, placing it at a disadvantage in terms of financial strength compared to Studio Dragon, JTBC Studio, and other listed production companies. Park Sung-ho, a researcher at Yuanta Securities, explained, "With the holding company merger as an opportunity, capital expansion for production companies such as Studio S's initial public offering (IPO) or a merger between Studio S and SBS Contents Hub could take place next year," adding, "The value of SBS's stake in Studio S is expected to be highlighted."

Accordingly, the market consensus for SBS has also been revised upward. Researcher Park said, "We are raising SBS's consolidated operating profit estimate for next year from 123.8 billion won to 151.5 billion won," explaining, "This is due to the upward revision of the head office's operating profit estimate from 92.4 billion won to 120.1 billion won." The effect related to the Qatar World Cup is also expected to be around 15 billion won.