[Click eStock] "Digital Daesung, M&A Effects Fully Realized... Ample Upside Potential"

Shinhan Investment Corp. maintained a buy rating and a target price of 9,600 KRW for Digital Daesung on the 21st. The previous day’s closing price was 7,250 KRW, indicating an upside potential of 32.4%.

On the day, Ji-eun Joo, a researcher at Shinhan Investment Corp., stated, "This year is the first year when the performance of Uidae-gwan, acquired in the third quarter of last year, will be fully reflected, and the operating leverage effect is expected to appear."

Last year’s fourth-quarter results met previous estimates. Consolidated sales increased by 9% year-on-year to 53.6 billion KRW, while operating losses continued at 3.5 billion KRW. This year, all business divisions are expected to maintain performance momentum. Positive factors include a slight increase in Hanwool membership for elementary and middle school levels, a rapid return to regular pricing for high school online pass products, and the full reflection of Uidae-gwan’s offline high school performance.

Researcher Joo emphasized, "The key points to watch in this year’s performance are the full reflection of Uidae-gwan’s results and high growth in high school online performance. Especially, the first half of the year is when Uidae-gwan’s results will be added for the first time." She also predicted, "Uidae-gwan’s sales are expected to increase from 34 billion KRW last year to 41.3 billion KRW this year. The contribution to operating profit from sales growth will increase."

The largest sales segment, high school online sales, is expected to grow by a high single digit from 107.1 billion KRW last year to 115.1 billion KRW this year. Researcher Joo analyzed, "The increase of 45,000 students in the 2007-born high school seniors compared to the previous year due to the Golden Pig Year effect, and the shortened sales period of the 19-pass leading to an earlier return to regular pricing are the reasons."

Regarding Egam (high school Korean and math mock exams), math mock exam sales started last year but were discontinued this year due to weak demand. Researcher Joo added, "By selling only the Korean mock exam, operating profit improvement is possible," and "Hanwool is expected to recover performance with a slight increase in membership and a new product launch scheduled for June."