[Click e-Stock] "DearU, Effect of Offline Content Resumption... Full-Scale Expansion in the Second Half"

[Asia Economy Reporter Lee Jung-yoon] Kiwoom Securities maintained a buy rating and a target price of 80,000 KRW for DearU, citing improvements in digital demand due to the resumption of offline content, and expecting subscriber growth as well as an increase in value per subscriber in the second half of this year with the entry of global artists, expansion into China, and the launch of live features.

DearU's operating revenue for the first quarter of this year was 11.7 billion KRW, up 31.5% year-on-year, and operating profit was 4.5 billion KRW, up 41.5%. The number of subscribers at the end of the first quarter was 1.3 million, an 8.3% increase from 1.2 million at the end of last year. The increase in subscribers in the first quarter was driven by major artist concerts from SM and JYP Ent., and it is expected that the relationship between subscriber growth and world tours will become even stronger from the second quarter onward. DearU's operating revenue for the second quarter is projected to increase 35% year-on-year to 12.8 billion KRW, with operating profit rising 48.3% to 5.1 billion KRW.

The second half of this year is expected to see full-scale expansion of overseas regional artists and service content. Namsoo Lee, a researcher at Kiwoom Securities, said, "With a global share of 73% in the first quarter, Bubble has firmly established itself as a global fandom platform and is expected to lead topline growth together with South Korea by entering the Chinese Android market," adding, "Market expansion related to the entry of global artists will also become visible."

He continued, "Once live features, which will enable closer communication between fans and stars, are launched, it is expected to increase average revenue per user (ARPU) and application dwell time, thereby simultaneously achieving the growth effect of price along with the demand stability inherent in the subscription model."