Woo Young-woo's Big Hit... Skylife Uhaha

Q2 Sales Up 45%... Analysis of Stock Undervaluation

[Asia Economy Reporter Lee Myunghwan] Skylife, which operates ENA, is benefiting from the success of the drama "Extraordinary Attorney Woo" (Woo Young-woo). Overcoming the limitation of being broadcast on a newly established cable channel, the drama recorded ratings in the 15% range, leading to positive evaluations regarding advertising revenue. However, the possibility of a merger with Studio Genie could pose a burden.

According to the financial investment industry on the 5th, Skylife announced its Q2 earnings on the 3rd, reporting sales of 254.2 billion KRW, a 45.2% increase compared to the same period last year. Operating profit for the same period rose 0.4% to 23.3 billion KRW. The company explained that the success of Woo Young-woo drove up the advertising unit price on the ENA channel. The drama has continued its popularity, recording a nationwide paid broadcasting household rating of 15.8% as of episode 9. Kim Hoejae, a researcher at Daishin Securities, said, "It is not easy to calculate the profit and loss caused by Woo Young-woo, but it is confirmed that ENA's advertising unit price has significantly increased."

Regarding this earnings announcement, the securities industry evaluated that Skylife has created an opportunity to be recognized as a content provider, moving beyond the limitations of being a satellite broadcasting transmission operator. As a satellite broadcasting operator, Skylife has seen a steady decline in subscribers due to intensified competition.

Considering the shift to content business, there is also analysis that Skylife's stock price is undervalued. Researcher Kim pointed out, "Structural changes have begun, and despite the appeal of high dividends, the current stock price is only about 6.9 times the price-earnings ratio (PER), indicating a significant undervaluation."

There is also a forecast that Skylife will continue strong performance in Q3, supported by the success of Woo Young-woo. Researcher Ahn Jaemin of NH Investment & Securities said, "Advertising revenue has sharply increased due to the success of Woo Young-woo," and added, "Advertising and content sales are expected to maintain favorable results in Q3 as well."

However, they advised caution regarding remaining variables related to corporate governance. Kim Junseop, a researcher at KB Securities, analyzed, "If the scenario of deciding to acquire Media Genie centered on SkyTV materializes, concerns about corporate governance restructuring are expected to be resolved," and added, "Depending on the acquisition method, the scale of cash outflow for the acquisition and the success of the next work following 'Extraordinary Attorney Woo' will act as volatility factors for the stock price."