[Click eStock] Is It Worth Buying Shares of the Producer of 'Army Cook: Become a Legend'?

Meritz Securities has lowered its target price for Studio Dragon from 48,000 won to 43,000 won, while maintaining a Buy rating.

On August 12, Jeong Jisoo, a researcher at Meritz Securities, stated, "Although Studio Dragon is enhancing its fundamentals through channel and genre diversification and an intellectual property (IP) value-up strategy, we decided to lower the target price due to changes in earnings estimates."

In the second quarter of this year, Studio Dragon’s consolidated revenue reached 145.3 billion won, up 26.9% from the same period last year. Operating profit returned to the black at 15.4 billion won, meeting consensus (14.8 billion won). Jeong explained, "The second-quarter lineup totaled 77 episodes, with series such as 'Army Cook: Become a Legend,' 'Yumi’s Cells 3,' 'The Boy at the Far End Row,' and 'Brave New World,' up from 41 episodes in the same period last year. The operating profit margin reached 10.6%, driven by reduced amortization expenses related to content and cost savings from expanded use of artificial intelligence (AI) in production."

The consolidated performance outlook for this year has been revised downward. Meritz Securities lowered its projections for Studio Dragon’s full-year consolidated revenue from 605.7 billion won to 569.1 billion won and operating profit from 56.4 billion won to 47.1 billion won. Jeong commented, "The lineup for the second half of this year will reach 166 episodes, similar to the first half’s 168 episodes, including highly anticipated series such as 'Slowly but Intensely' and '100 Days of Lies.' However, with a change in amortization periods—48 months for regular titles and flat-rate 4 months for OTT pre-sales—since the second quarter, volatility in performance figures unrelated to actual sales and business activities will be reduced."

This content was produced with the assistance of AI translation services.