Studio Dragon enters 3Q earnings normalization phase (Kiwoom Securities)

Regarding Studio Dragon, Kiwoom Securities said on the 8th that it would enter the normalization phase after deviating from the sluggishness of the second quarter, but it was regrettable that there were no large works compared to last year.

The investment rating is 'buy' and the target price is lowered to 130,000 won, about 7.7% lower than the previous price.

"Studio Dragon's sales in the third quarter rose 15.8% year-on-year to KRW 123.1 billion and operating profit fell 7.4% to KRW 14.9 billion. This will be below all market expectations," said Kiwoom Securities.

Kiwoom Securities said, "Sales will be organized and sold not only through TV but also through various platforms such as Netflix and TVing," adding, "It will be possible to improve organization and sales at the same time due to the expansion of the number of works compared to the second quarter when TV programming was somewhat sluggish.".

"In particular, as the number of flights launched through Netflix continues to increase, the contribution to the performance of content production contracts scheduled for 2022 will contribute to stable performance," Kiwoom Securities said.

"If new businesses expand with Disney Plus, HBO max and Apple TV, which are scheduled to be launched in November, we will be able to 'level up' as an international drama producer beyond just overseas exports," Kiwoom Securities predicted.

Reporter Lee Dong-hoon usinvestmentidea2020@gmail.com