[Click eStock] “SAMG Enter, ‘Sarang-ui Hatchuping’ Hits Big... Turnaround Begins”

Shinhan Investment Corp. forecasted on the 15th that SAMG Entertainment, a content intellectual property (IP) producer proven by Tinyping, will turn profitable in the fourth quarter of last year.

SAMG Entertainment is a popular content IP producer, with representative works including Catch! Tinyping, Wish Cat, and Mini Special Forces. In particular, the Tinyping IP achieved a leap from a kids' IP to a character IP through the success of the movie Love's Hatchuping.

Ji-eun Joo, a researcher at Shinhan Investment Corp., analyzed in a report on the same day, "In the first half of 2024, non-core business divisions (games, fashion) will be reorganized, and by the third quarter, approximately 8 billion KRW worth of accumulated inventory will be cleared, leading to an expected operating profit turnaround from the fourth quarter."

Researcher Joo expected that the fourth quarter sales would increase by 18% year-on-year to 40.6 billion KRW, and operating profit would turn positive to 1.9 billion KRW. The main factors for profit improvement were ▲diversification of license sales ▲completion of accumulated inventory clearance ▲improvement in cost of sales ratio.

License sales are estimated at 4.9 billion KRW (+60% year-on-year) in the fourth quarter alone, with the target age group expanding from existing kids' product lines (car seats, children's toothpaste/toothbrushes) to the F&B sector such as coffee and hamburgers, driven by the movie's success. Additionally, as fashion inventory previously sold at a discount is depleted, the cost of sales ratio is expected to improve.

In 2025, SAMG Entertainment's sales are expected to increase by 18% year-on-year to 135.3 billion KRW, with operating profit turning positive to 5.7 billion KRW. Researcher Joo analyzed, "Expansion of the target age group, expansion of domestic toy sales channels, increase in overseas sales centered on China and Japan, and collaboration with major partners will be key drivers of sales growth." She also evaluated that the annual profitability turnaround is highly likely due to the effects of restructuring non-core business divisions, expanded cost recovery from increased IP value, and elimination of stock compensation costs.

Researcher Joo emphasized, "With steadily growing sales and cost efficiency, a net profit turnaround is possible in 2025," adding, "It is necessary to pay attention to performance growth."