[Featured Stock] Dear U Jumps Over 7% on Strong Earnings and Overseas Expansion

The share price of Dear U, which operates the global fan communication platform Bubble, is on the rise. This appears to reflect both last year's fourth-quarter results beating market expectations and expectations that the pace of overseas business expansion will accelerate this year.

As of 9:24 a.m. on February 5, Dear U was trading at 40,900 won, up 2,900 won (7.63%) from the previous trading day.

In the fourth quarter of last year, Dear U posted revenue of 23.8 billion won (up 33.9% year-on-year) and operating profit of 9.8 billion won (up 100.4% year-on-year), exceeding the market consensus of 9.1 billion won.

IBK Investment & Securities maintained its "buy" investment rating and target price of 52,000 won on Dear U on this day.

Kim Youhyuk, an analyst at IBK Investment & Securities, said, "Although the number of subscribers decreased slightly due to factors such as some artists enlisting in the military, the subscription fee hikes and the positive impact of the weaker won drove revenue growth," adding, "The increase in subscribers to Bubble in Japan and the recognition of royalty income from Tencent Music Entertainment (TME)'s QQ Music Bubble in China contributed to operating profit growth. It is also positive that the payment conversion rate is rising for payment gateway (PG) methods, which charge lower transaction fees."

The expansion of its overseas business is expected to accelerate further this year. Kim added, "Since subscribers account for a fairly high proportion of local artists in China, we expect royalty income to grow as intellectual property (IP) onboarding expands." He also predicted, "The launch of new services at the end of last year through Joox, a music streaming platform in Southeast Asia, will serve as a springboard for future growth."