[Click eStock] 'Undervalued' Laemong Laein, Forecasted Record High Operating Profit (Comprehensive)

[Asia Economy Reporter Hwang Yoon-joo] Hana Financial Investment initiated coverage on the 17th for RaemongRaein, calling it the most undervalued drama production company in South Korea, with a 'Buy' investment rating and a target price of 45,800 KRW.

Choi Jae-ho, a researcher at Hana Financial Investment, stated, "This year marks a phase of undervaluation resolution due to unprecedented earnings growth," and "actively recommends buying."

Researcher Choi analyzed, "In the past, it was an outsourced drama production company, but starting this year, it adopted an IP acquisition model, and explosive margin growth is expected due to the evolution of the business model (BM). Additionally, through synergy with Wysiwyg Studio Group, the IP library (pipeline) and the number of works producible annually (CAPA) are expected to expand."

Choi added, "Valuation premiums will expand through synergy creation among group affiliates," and explained, "The biggest synergy is the continuous expansion of RaemongRaein's IP pipeline as internal sourcing of IP among affiliates becomes possible."

He further projected the 2022 expected performance as sales of 64.8 billion KRW (+61.2% YoY) and operating profit of 9.1 billion KRW (+106.8% YoY).

RaemongRaein is a subsidiary of the comprehensive content group Wysiwyg Studio. It has secured large-scale domestic and international projects such as Space Sweepers, Deep Sea Challenge, Mulan, and The Witch.

Yoo Sung-man, a researcher at Leading Investment & Securities, stated, "Wysiwyg Studio is aggressively expanding IPs in areas such as drama, entertainment, new media, webtoons, and web novels through acquiring new subsidiaries, equity investments, and establishing joint ventures (JVs)."

In August last year, NP (a content creative business related to advertising planning and production) was listed through a SPAC merger, and in December, RaemongRaein completed its transfer listing to the KOSDAQ market.

Researcher Yoo evaluated, "They are pursuing profitability maximization through an 'One Source Multi Use (OSMU)' strategy of publishing and web content via video production with 'IP holder companies.'"