[Click eStock] DearU, Limited Impact from SM Share Sale

[Asia Economy Reporter Hwang Junho] Kiwoom Securities maintained the target price of DearU at 80,000 KRW on the 27th, stating that the business impact from the sale of SM Entertainment's largest shareholder stake would be limited.

DearU plans to undertake new businesses this year in Q2-Q3, such as entering the Chinese Android market, launching 'Bubble Live,' and offering a beta service for 'MyHome,' all aimed at increasing the value per subscriber.

Considering the relatively small total number of subscriptions compared to initial album sales, the fandom loyalty of subscribers is expected to be quite high. Accordingly, Kiwoom Securities believes that in the second half of this year, Bubble Live will drive an increase in value per subscriber through service category expansion and the addition of fan gift features. Accessibility is expected to improve significantly with digital fan gifts, facilitating smooth service inflow from both domestic and global fandoms. Additionally, the artist effect through CJ ENM's entertainment programs and the benefits from Kakao's messenger and platform operator expertise are expected to stand out.

Operating revenue for Q1 this year is expected to reach 13.1 billion KRW, up 46.9% year-on-year, and operating profit is projected at 5.2 billion KRW, a 62.2% increase. The average number of subscriptions in Q1 is estimated at 1.31 million, which is 52.8% higher than last year.

Researcher Namsoo Lee of Kiwoom Securities explained, "The growth in subscriptions in Q1, driven by the reopening effect following the resumption of concerts, is expected to show a more robust trend in the second half with concert expansions," adding, "The world tours of NCT 127, TWICE, and Stray Kids, which have officially started, will serve as key points to further strengthen subscriber depth."