[Click eStock] "Sports is disappointing... but those who watch SOOP keep watching"

Risks from Accounting and Tax Audits Remain
Limited Impact from PlayD Acquisition So Far
Core Users Remain... Expectations for Mid- to Long-Term Overseas Growth

There is an analysis that the stock price of the online streaming platform SOOP (formerly Afreeca) has no short-term upward momentum but also carries low downside risk. This is because loyal customer demand remains strong despite various regulatory investigation risks. Ultimately, the key will be the direction of establishing a long-term growth strategy going forward.

On the 8th, KB Securities maintained its 'Buy' rating on SOOP based on this background. However, the target price was lowered by 19% to 117,000 KRW. The closing price the previous day was 85,600 KRW.

They judged that risks have arisen due to the Financial Supervisory Service's accounting investigation and the National Tax Service's tax audit of streamers, and that the short-term effects of acquiring the digital advertising agency PlayD are also limited.

They expected the first quarter earnings this year to meet market consensus with sales of 102.3 billion KRW and operating profit of 29.7 billion KRW. These figures represent increases of 7.7% and 4.2%, respectively, compared to the same period last year. Although the growth trend will continue due to the expansion of the live streaming market, the growth rate is expected to slow down due to the burden of last year's high growth.

Overseas performance was somewhat disappointing. It was analyzed that the likelihood of showing results within 1 to 2 years is low. However, in the long term, they expect SOOP to expand its target countries beyond Thailand, and in such cases, various business models (BM) can be applied under regulations that are more relaxed than in Korea. They also anticipated that the commission policy would be more favorable overseas. Domestically, settlements are made after deducting costs from payment gateway (PG) providers, but overseas settlements include PG costs.

Choi Yong-hyun, a researcher at KB Securities, explained, "SOOP's dependence on a small number of users has been cited as a growth concern, and recent declines in monthly unique visitors (MUV) have increased that concern. The main cause is the absence of sports content due to broadcasting rights fees, but since sports content viewers contribute little to revenue, it is not expected to be a significant burden."