[Click eStock] "Studio Dragon, Full-Scale Global Expansion"

Daishin Securities Report

[Asia Economy Reporter Minji Lee] Daishin Securities maintained a buy rating and a target price of 130,000 KRW for Studio Dragon on the 18th.

In the second quarter, revenue was 110 billion KRW and operating profit was 13.8 billion KRW, down 34% and 18% respectively compared to the same period last year. With 63 drama episodes scheduled for the second quarter, some production and scheduling were postponed to the third quarter or later, resulting in a temporary decrease in scheduling revenue due to schedule adjustments. However, sales volume has steadily increased, and the overseas sales ratio rose to a record high of 84%, improving the operating profit margin by 2.6% to 13% compared to the same period last year.

In the third quarter, with three original dramas scheduled for TVING and Netflix, the drama lineup is expected to normalize to 127 episodes. Overseas sales of popular works that ended in the first half are anticipated, and operating profit is projected to increase by 29% year-on-year to 20.7 billion KRW.

Concerns about production reduction at Studio Dragon due to ENM's increased investment in TVING are expected to be unfounded. Rather, the company's role is expected to be emphasized with TVING's expansion. At the beginning of the year, the expected number of TVING dramas was expanded from 3 to 5-6, with 5 already confirmed.

Next year is expected to be a year of global expansion as the series order for Apple TV+ titled ‘The Big Door Prize’ will be reflected in sales. Kim Hoe-jae, a researcher at Daishin Securities, explained, “It is currently in production aiming for broadcast in the second half of next year, and there is an incentive structure for additional seasons. The sales scale is about 10 times that of Korean dramas of similar length, and the IP is jointly owned by the co-producer Skydance, Apple TV+, and Studio Dragon, which is a favorable condition.”

There are 18 projects underway for global planning and development. Eight works are under negotiation with global OTT platforms, two of which are in the pre-production stage. Besides the already announced Apple TV+’s The Big Door Prize, one more is expected to be released within this year. Researcher Kim Hoe-jae stated, “Contracts with global OTTs are progressing smoothly and are being negotiated favorably for Dragon. In the case of Netflix, anticipating the entry of other major global OTTs into Korea, they proactively requested contract extensions with the company, and for iQIYI, Dragon owns the IP.”

This content was produced with the assistance of AI translation services.