[Click eStock] "Studio Dragon, H2 Earnings Improvement Expected... Target Price Maintained"

On the 15th, Korea Investment & Securities forecasted that Studio Dragon's performance would improve from the second half of the year. They maintained a 'Buy' investment rating and a target price of 51,000 KRW.

Korea Investment & Securities projected that Studio Dragon's Q4 revenue last year would decrease by 33% year-on-year to 108 billion KRW, while operating profit would turn positive to record 3.5 billion KRW. The operating profit is below the market expectation of 5.1 billion KRW.

Researcher Ando Young from Korea Investment & Securities explained, "Although the number of episodes decreased to 42, down 28 from the same period last year and 16 from the previous quarter, we expect better results than the previous quarter. This is because all TV broadcasts were simultaneously aired on global online streaming services (OTT), and the amortization of 'Nunmul-ui Yeowang' (The Queen of Tears) ended, while the scale of the dramas aired in Q3 was small, reducing amortization burdens."

Researcher Ando anticipated that significant results would emerge in the second half of the year. He said, "From the second half of this year, performance improvements will appear due to increased production and structural improvements. The upward trend in performance will continue next year as well. Additional valuation rerating is expected to occur when the results of new business models (BM) in the second half and the visibility of U.S. drama production become apparent." He added, "Apart from Q4 results, the disclosure of the annual business plan during the earnings announcement could also act as a short-term momentum."