[Click eStock] “Studio Dragon, Earnings to Bottom Out and Rise”

On the 11th, Korea Investment & Securities forecasted that Studio Dragon's third-quarter earnings have hit the bottom and will improve starting from the fourth quarter.

Andoyoung Ahn, a researcher at Korea Investment & Securities, stated in a report on the same day, "Third-quarter sales are expected to be 112.7 billion KRW (down 48% year-on-year), and operating profit is expected to be 7.8 billion KRW (down 64% year-on-year), falling 34% short of the consensus operating profit of 11.9 billion KRW," adding, "The number of episodes reflected was 59, which increased compared to the previous quarter (42 episodes), but still decreased by about 21% compared to the same period last year (75 episodes)."

Quarterly earnings are expected to hit the bottom in the third quarter and improve from the fourth quarter. He said, "Although the number of episodes reflected is expected to decrease compared to the third quarter, the definite blockbuster 'Jeongnyeoni' is scheduled to air," and predicted, "Due to the absence of a blockbuster in the third quarter, the burden of amortization costs is also low, so operating profit will improve."

He also said, "In the first quarter of next year, the all-time blockbuster 'Ask the Stars,' starring Gong Hyo-jin and Lee Min-ho, is scheduled to air, and the expected points of performance improvement will be revealed next year," and analyzed, "The resumption of tvN's Wednesday-Thursday dramas and the expansion of non-captive content on KBS and others are expected to increase Q."

He continued, "Currently, the valuation has reached the lowest end of the band," and forecasted, "There have been discussions about excessive production costs and the resulting decrease in the number of productions, and it is gradually moving towards more efficient production and scheduling, so a full-scale performance recovery is expected with Q recovery and profitability improvement next year, and the long period of stock price decline will gradually come to an end."