[Click eStock] "DearU's Performance Improvement Will Be Prominent in the Second Half"

Kiwoom Securities Report

[Asia Economy Reporter Minji Lee] Kiwoom Securities maintained a buy rating and a target price of 60,000 KRW on DearU on the 6th, expecting subscriber growth in the second half of the year.

In the second quarter, DearU recorded sales of 11.6 billion KRW and operating profit of 3.5 billion KRW, growing 22.5% and 0.8% respectively compared to the same period last year. These figures reflect a temporary slowdown in subscriber growth and one-time labor costs. In the third quarter, subscriber growth is expected to be more pronounced, with sales and operating profit estimated at 13.3 billion KRW and 4.7 billion KRW, representing increases of 24% and 12%, respectively.

Namsoo Lee, a researcher at Kiwoom Securities, explained, “In the third quarter, subscriber improvements will occur for artists conducting offline concerts and world tours. The number of subscribers, which reached 1.35 million at the end of the second quarter, improved by about 15% to reach 1.5 million.” He analyzed that since artists with a large share of performance results within SM and JYPEnt. (Twice, NCT 127) are holding world tours, subscriber growth per artist is expected to be solid.

The expansion of new artists joining the platform is also promising. Researcher Namsoo Lee said, “Since the environment for new domestic artists joining the platform is rigid, expanding global artists through sufficient use of public offering funds is essential,” adding, “The growth of global artists and expansion into China will actively support the company’s most important indicator, subscriber growth.”

The increasing value per subscriber through Bubble Live is enhancing investment appeal. This month, after the beta service ends, service expansion using paid items is expected. The growth in overseas shares, including global artists and markets such as China and Japan, is increasing the potential for the use of paid items in the future.

Researcher Namsoo Lee stated, “From the third quarter, solid subscriber growth and price increase points will occur through world tours and global expansion,” and added, “With the second quarter results as the bottom, performance improvement will be more prominent in the second half of the year.”