[Click eStock] "Daekyo, Expectations for New IP Business... Will Become a Growth Engine"

Ebest Investment & Securities maintained its investment rating as Hold and target price of 2,600 KRW for Daekyo on the 2nd.

Daekyo's sales in the third quarter of this year recorded 161.5 billion KRW, down 5.2% year-on-year, and an operating loss of 6.8 billion KRW. This sales figure is 6.5% below Ebest Investment & Securities' previous estimate, while the operating loss is at a similar level. The Noonpyo segment recorded sales of 121.5 billion KRW and operating profit of 1.2 billion KRW, which is understood to reflect the effect of reduced advertising expenses. In September, Daekyo increased new borrowings by 10 billion KRW and currently holds short-term borrowings of 35 billion KRW.

Expectations are rising for Daekyo's New EAP business. Sales increased from 300 million KRW in the third quarter of last year to 1.3 billion KRW in the third quarter of this year. Researcher Jeong Hongsik of Ebest Investment & Securities explained, "Although still minimal, it is expected to be a growth driver from a mid- to long-term perspective," adding, "Daekyo New EAP operates daycare centers and home care centers targeting the elderly."

He further explained, "These centers are operated by business operators who hold social worker and care welfare worker qualifications and receive government support for long-term care insurance beneficiaries, mainly customers aged 65 and older," and added, "Daekyo plans to increase centers through franchising and expects aggressive expansion in scale considering the aging population trend."

Additionally, Daekyo is expanding its business areas to alleviate concerns about the declining school-age population. Researcher Jeong said, "Recently, Daekyo entered the distribution business of the U.S. art supplies brand 'Crayola' and is promoting distribution after securing the IP of a popular Japanese animation movie," adding, "In the future, Daekyo plans to expand its lineup not only in education but also in educational supplies and related products targeting children from infancy to elementary school students."