[Click eStock] Daishin Securities "Studio Dragon, Investment Appeal Sufficient Even Without Hanhanryeong Lift"

Maintaining 'Buy' Investment Rating

Daishin Securities analyzed on the 21st that even excluding the lifting of the Hanhanryeong (限韓令·Korean Wave restriction order) on Studio Dragon, the investment environment is favorable due to the recovery of TV advertising and an increase in production volume. The investment opinion was maintained as ‘Buy’ with a target price of 64,000 KRW.

Kim Hoe-jae, a researcher at Daishin Securities, said on the day, “The reopening of the Chinese market is a very important event for content performance and stock price,” adding, “Among the 18 older dramas officially supplied to Chinese OTT platforms from 2022 to 2023, 5 were produced by Studio Dragon, so it is necessary to pay priority attention in the event of the Chinese market reopening.” As expectations grew that China could lift the Hanhanryeong as early as May, Studio Dragon closed at 49,400 KRW, up 18% from the previous trading day.

He continued, “Studio Dragon is securing the capacity to produce about 30 dramas annually, producing and supplying an average of 10 simultaneous broadcasts and 7 originals per year,” and “Within the production volume, simultaneous broadcasts on global OTTs and Chinese OTTs, as well as additional productions for Chinese OTTs, are possible.” Researcher Kim estimated that if about 20 billion KRW worth of simultaneous broadcasts are achieved once each this year and next year, Studio Dragon’s operating profit would increase by 39% and 29% respectively in 2023 and 2024.

However, Kim viewed that even excluding the lifting of the Hanhanryeong, it is a good time to expand investments in content sectors such as Studio Dragon. He analyzed, “TV advertising, which was sluggish in 2023?2024, hit a bottom in the third to fourth quarter of last year and has partially rebounded, improving the environment, and Studio Dragon’s production volume this year is expected to increase by 6 dramas compared to the previous year to more than 25.” He also pointed out, “Continued love calls from major global OTTs increase the possibility of rising simultaneous broadcast recoup rates and original margins.”