[Alpha Biz= Paul Lee] On May 9, NH Investment & Securities maintained its target price of KRW 62,000 for Studio Dragon, stating that while the production company’s first-quarter earnings fell short of market expectations, profitability and sales volume are expected to improve in the second half of the year.
Studio Dragon closed at KRW 50,800 the previous day.
In a report, analyst Lee Hwa-jung noted, "Major upcoming dramas have been pre-sold to global streaming platforms such as Netflix and Amazon Prime, raising expectations for improved pricing. The number of aired episodes per quarter is also increasing, and the return of tvN’s Wednesday-Thursday drama slot in the second half, along with a confirmed delivery schedule for a locally produced Japanese drama, will be favorable for sales volume."
Lee added, "The company is pursuing a 10% reduction in production costs per project through a cost-reimbursement model. As more dramas adopt this system, the benefits should gradually become evident."
Studio Dragon posted revenue of KRW 133.8 billion and operating profit of KRW 4.3 billion in the first quarter, down 30% and 80% year-on-year, respectively. Lee attributed the decline to fewer pre-sold projects to global streaming platforms and the underperformance of new titles such as Ask the Stars.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
