[Click eStock] "SOOP Must Ultimately Deliver Results"

Korea Investment & Securities announced on July 31 that it has lowered its target price for SOOP from 145,000 won to 120,000 won, citing the company's disappointing performance in the first half of this year and the fact that it will take more time for the overseas business division?considered a key future growth driver?to meaningfully contribute to earnings. The investment opinion remains 'Buy'.

In the second quarter, SOOP reported revenue of 116.9 billion won (up 15.2% year-on-year) and operating profit of 30 billion won (down 9.9%), both falling short of market expectations (operating profit consensus: 32.9 billion won). Platform revenue was 84.5 billion won (up 2.1%), similar to the previous quarter. However, an overall increase in light user inflow in categories such as sports and games did not translate into meaningful revenue contribution.

Jung Hoyoon of Korea Investment & Securities commented on the advertising revenue of 30.8 billion won (up 75.7%), stating, "The strong growth was driven by the expansion of branded content advertising and the acquisition effect of PlayD, which contributed to significant topline growth." However, he added, "Ultimately, the slowdown in growth of the high-margin platform division led to operating profit falling short of consensus."

For SOOP, while earnings stability in the domestic market is somewhat assured, there is a consensus that visible achievements in the overseas business are needed to meet the growth expectations investors have for platform companies. Analyst Jung said, "User metrics for the platform remain solid, and ARPU (average revenue per user) continues to rise, so a rebound in growth rate can be expected at any time. However, the first half of this year was disappointing in terms of results." He added, "Whether the platform division?the core cash cow?can achieve a rebound in growth rate will be a key factor going forward."