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[Alpha Biz=(Chicago) Reporter Paul Lee] Korea Investment & Securities Co. said on the 18th that Studio Dragon is expected to perform poorly in the fourth quarter of last year and that there is a lack of opportunity for a stock price rebound in the short term. He lowered the target stock price from 80,000 won to 63,000 won and suggested an investment opinion 'buy'. Studio Dragon's closing price for the previous trading day is 45,650 won.
Korea Investment & Securities forecast Studio Dragon's sales in the fourth quarter of last year to be 167.9 billion won, down 12 percent from a year earlier, and its operating profit to 4.4 billion won, up 270 percent from a year earlier. The estimated operating profit is less than 52% of the stock market consensus (market forecast) of 9.1 billion won.
Studio Dragon's annual number of works will decrease in the future, but profits will increase. This is due to the expansion of simultaneous broadcasts and the improvement of the Recoop ratio, the ratio of production cost support. The number of Studio Dragon dramas expected by Korea Investment & Securities this year is 26, down three from the previous year.
"The ratio of simultaneous airing will increase as TV-oriented dramas decrease," said Korea Investment & Securities. "The profitability of works that have not been sold due to simultaneous airing will improve overall due to strong sales of local online video services (OTT)." He also expected profit margins to rise this year due to lower base of sales of old products last year.
However, the short-term rebound factor of Studio Dragon was insufficient.
AlphaBIZ 폴 리(hoondork1977@alphabiz.co.kr)
