[Click eStock] "Digital Daesung, Hanuri Platform Launch Delayed... 8%↓"

NH Investment & Securities Report

[Asia Economy Reporter Minji Lee] NH Investment & Securities maintained a buy rating on Digital Daesung on the 19th, but lowered the target price by 8% to 12,000 KRW. This was analyzed to be due to the delay in the launch timing of the Hanwoori online reading platform for general members.

Consolidated sales for the fourth quarter are estimated to reach 49.5 billion KRW, a 19% increase. Operating loss is expected to continue at 500 million KRW. This is due to increased expenses such as personnel costs including incentives, and advertising and promotional expenses, resulting in weaker performance compared to the previous quarter.

Sales in the high school segment are expected to have increased by 18% to 36.6 billion KRW. The fourth quarter is an off-season, and since the Gangnam Daesung Dormitory Academy closes from mid-November to December after the college entrance exam, the contribution to performance compared to the previous quarter inevitably decreases. Sales in the elementary and middle school segment are estimated to have grown by 39% to 12.9 billion KRW compared to a year ago. Jiyoon Jeong, a researcher at NH Investment & Securities, said, “Synergies from the merger in February last year and operational efficiency are expected to result in an operating profit margin in the mid-teens, around 14%.”

The cumulative payment amount for Daesung All Pass (2023) is understood to have grown by 25% year-on-year as of January since its launch. This year, favorable external conditions such as the expansion of regular admissions and weakening competition in the online entrance exam market, along with sales by top Korean language instructors and price increase effects, are expected to drive a 31% annual increase in high school online sales.

Sales growth in the elementary and middle school segment is forecasted to be 14% this year. Hanwoori currently has 125,000 members and is conducting stable business activities. Researcher Jiyoon Jeong said, “However, since the launch timing for new members, not existing members, has been delayed from the originally expected time (the first quarter of this year), a downward revision of performance estimates for the elementary and middle school segment is inevitable.”