Korea Investment & Securities said on the 5th that Studio Dragon is expected to receive structural benefits from increased demand for Korean dramas. Investment opinion 'buy' and target stock price remained at 120,000 won.
Studio Dragon recorded sales of 116.1 billion won and operating profit of 14.6 billion won in the third quarter of this year. The figure fell 9.2 percent and 9.0 percent year-on-year, respectively, falling below the consensus.
Organized sales continued to decline to KRW 36.2 billion, but sales were strong at KRW 64.9 billion, according to analysts. Korea Investment & Securities analyzed, "Due to the delayed expansion of the drama slot despite the rebound in the advertising market, the number of broadcasts decreased by 1.5 compared to the same period last year, and sales to China in the third quarter of last year had a reverse base effect.".
Korea Investment & Securities presented Studio Dragon's estimated operating profit of 16.6 billion won in the fourth quarter of this year and 82.3 billion won next year.
"As advertising sales by local broadcasting stations continue to increase, drama programming will increase from the fourth quarter," Korea Investment & Securities said.
"OTT's increased investment in dramas such as TVING and iQiyi will allow the company to diversify its sales sources, and if a drama targeting North America becomes a hit, it will be recognized for its ability to differentiate itself from small and medium-sized production companies.".
Reporter Lee Dong-hoon usinvestmentidea2020@gmail.com
