[Click eStock] Studio Dragon, 'Surprise Earnings' Driven by K-Content Overseas Exports

[Asia Economy Reporter Ji Yeon-jin] Ebest Investment & Securities announced on the 9th that Studio Dragon recorded a surprise performance exceeding market expectations for the third quarter of this year, maintaining a buy rating and a target price of 111,000 KRW.

Studio Dragon's sales in the third quarter increased by 97.2% year-on-year to 228.9 billion KRW, and operating profit rose by 29.9% to 18.9 billion KRW. It is analyzed that the sales of seven OTT originals, including its first Hollywood production, contributed to this external growth. During this period, sales revenue reached 165.8 billion KRW, up 155.5%, and overseas sales surged 195.7% to 157 billion KRW.

With expectations of expanded original content and programming in the second half of this year, annual sales are projected to increase by 22.5% to 808.5 billion KRW, and operating profit is expected to grow 34% to 103.5 billion KRW. In the fourth quarter of this year, two Netflix originals, including the major work 'The Glory' by writer Kim Eun-sook, are scheduled to be aired.

Researcher An Jin-ah of Ebest Investment & Securities stated, "The company holds an advantageous position in contract negotiations with Netflix," adding, "the detailed terms are being adjusted in the final stages of contract renewal, and the actual contract is expected to be finalized this year, with 2023 broadcasts to be aired under improved conditions." She continued, "Compared to global content companies, Studio Dragon has a high price competitiveness considering its diverse hit productions with relatively low production costs and the increasing demand for Korean content in overseas markets."