[Click eStock] "DearU, Expanding Market is Wide... Demand and Supply Growth Awaiting"

[Asia Economy Reporter Lee Myunghwan] Daishin Securities announced on the 6th that it has newly issued a buy rating and a target price of 43,000 KRW for DearU. This is based on the expectation that the company will strengthen its business model through the acquisition of new artists and new services.

DearU, an affiliate of SM Entertainment (SM), provides services such as the private messenger platform 'DearU Bubble' for communication between celebrities and fans, and the karaoke application 'EverySing'.

Daishin Securities diagnosed that the growth rate of subscribers has recently slowed down after the entry of artists affiliated with SM and JYP Ent. since DearU started its service in February 2020. However, it analyzed that the onboarding of domestic artists has only just been completed. As of the second quarter of this year, DearU recorded 1.35 million monthly active users (MAU), and Daishin Securities expects the MAU to reach 1.55 million by the third quarter of this year.

DearU plans to expand into the Chinese market by entering the Android market in China in the fourth quarter. Currently, DearU only provides services through the iOS App Store in China. As of the end of the second quarter, Chinese users accounted for about 30% of DearU’s user base. Since Android has a higher market share in China, growth in the number of Chinese users is expected.

There is also a forecast that the recruitment of overseas artists will directly lead to increased performance. Daishin Securities reported that DearU is in the process of onboarding artists from Asian regions such as Japan and China, where K-pop and fandom tendencies are similar. Since all DearU users are paid subscribers, user growth is expected to directly translate into increased earnings, according to Daishin Securities.

It is also expected to strengthen its business model through new services. DearU launched the Bubble Live service on the 19th of last month and plans to release the official service in September. In the first half of next year, it plans to start an item store and MyHome service, where fans will be able to purchase digital items by opening a MyHome, a mini-homepage concept, within the app. Researcher Lee Ji-eun of Daishin Securities predicted, "Through strengthening the business model, the time spent in the app, retention rate, and average revenue per user (ARPU) will all increase."