[Click eStock] "Studio Dragon Set for Full-Fledged Earnings Turnaround This Year... Top Pick in Media"

On January 7, DS Investment & Securities maintained its top pick recommendation for Studio Dragon within the media sector, stating, "A full-fledged earnings turnaround is expected this year."

Jang Ji-hye, an analyst at DS Investment & Securities, reiterated a 'Buy' rating and a target price of 60,000 won for Studio Dragon in her report released the same day. The target price was calculated by applying a target multiple of 8 times this year's EBITDA.

Jang forecasted that Studio Dragon's earnings for the fourth quarter of 2025 would exceed market expectations. She projected consolidated sales of 147.9 billion won in the fourth quarter (a 13% increase year-on-year), operating profit of 18.4 billion won (a 245% increase), and an operating profit margin (OPM) of 12.5%. The number of broadcast episodes is expected to reach 66 (46 for TV and 20 for OTT), up by 20 episodes from the same period last year. She analyzed that most TV-scheduled titles were pre-sold to global OTT platforms, resulting in both top-line growth and improved profitability.

In particular, the main titles such as "Project New Boss," "Typhoon Corporation," "Annoying Love," and "Pro Bono" (for TV), as well as "Dear X" and "Soulmate" (for OTT), showed outstanding performance. Additionally, the expansion of overseas content sales through the Tving brand section within HBO Max and Disney+ Japan also contributed to the quarterly earnings improvement.

Jang projected that Studio Dragon will achieve a full-fledged rebound this year, with sales of 647.3 billion won (a 22% increase year-on-year) and operating profit of 55.3 billion won (an 83% increase). She cited increased drama production volume, expanded pre-sales to global OTT platforms, production cost efficiency, and the expansion of intellectual property (IP) business as the drivers of this growth. The annual number of drama productions is estimated to rise from 18 in 2024 and 20 in 2025 to more than 25 this year.

She emphasized, "Content sales channel diversification will become more prominent through increased supply of dramas to terrestrial broadcasters, the resumption of the captive Wednesday-Thursday lineup, and the expansion of original content for both domestic and international OTT platforms." She added, "Studio Dragon will overcome the limitations of the drama production business by expanding its IP business." The company plans to diversify its business into four areas-commerce, digital, character, and human IP-by leveraging its produced dramas as platforms. Studio Dragon also aims to increase the proportion of IP business revenue from the current 3% to 30% in the medium to long term.