[Click eStock] "SBS, 1Q Earnings Bottom... Gradual Recovery Expected"

SK Securities on the 20th forecasted a performance bottom for SBS in the first quarter of this year. Accordingly, it maintained a 'Buy' investment rating and a target price of 55,000 KRW.

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Nam Hyo-ji, a researcher at SK Securities, stated, "Operating profit for the first quarter of this year is expected to decrease by 83.2% year-on-year to 10.3 billion KRW," adding, "This takes into account the sluggish advertising market at the beginning of the year."

Researcher Nam analyzed, "In January and February, TV advertising expenditures were sluggish due to the economic downturn and the pre-execution of World Cup-related advertising budgets in the fourth quarter of last year." However, he noted that 'Model Taxi 2' recorded a favorable viewership rating (latest episode 16.0%), so the impact on advertising revenue compared to competing channels is expected to be minimal.

Nam evaluated that SBS's performance will gradually recover after the first quarter. He explained, "The airing of 'Romantic Doctor Kim Sa-bu 3' is scheduled for April," adding, "Previous seasons achieved high viewership ratings (Season 1 (27.6%), Season 2 (27.1%)), so the package price for Season 3 will also be set high."

However, considering the advertising market being worse than expected, the performance estimates were revised downward. Researcher Nam analyzed, "Operating profit for 2023 is estimated at 116.1 billion KRW, a 37.4% decrease from the previous year," and added, "This reflects a 29.3% downward revision from previous estimates due to the less favorable TV advertising market."

The reasons for maintaining the target price and investment rating are mainly threefold. Researcher Nam added, "This year, the increase in the number of in-house productions by Studio S, the airing of seasonal and hit writer works maintaining higher channel attractiveness compared to competitors, flexible scheduling for production cost efficiency, and expectations for the lifting of foreign ownership limits remain valid."