[Click e-Stock] "'Signal 2' may be difficult to air, but production company remains on turnaround track"

Shinhan Securities cut its target price for Studio Dragon from KRW 32,000 to KRW 30,000 while maintaining its Buy rating.

On October 13, research fellow Ji Inhye of Shinhan Securities said, “We lowered our earnings estimate by 12% from our previous forecast after adjusting the number of productions amid uncertainty over the airing of ‘Signal 2,’ which led us to cut the target price. However, considering the 12-month forward price-to-earnings ratio (PER) of 14.8 times, we believe the stock is a buy.”

Studio Dragon’s third-quarter results this year are expected to exceed market expectations on an expansion in production scale. Revenue is forecast to rise 16.1% year over year to KRW 158.5 billion, while operating profit is expected to jump 64.5% to KRW 17.2 billion. “Although the number of episodes aired fell sharply to 64, many of the TV episodes were also simulcast on OTT platforms such as Netflix and Amazon, boosting recoupment rates and profitability. Production scale also increased as the Netflix original ‘Slowly, Intensely,’ with a production cost of more than KRW 3 billion per episode, was fully reflected in the results,” Ji explained.

“Large-budget productions have generated stable margins as originals, while for works with IP ownership, the company is strengthening its turnaround by actively improving production-cost efficiency and increasing the number of productions,” Ji said. “Although the number of episodes airing in the fourth quarter this year is also likely to decline, OTT presales have been made for titles such as ‘100 Days of Lies’ and ‘Gift,’ and the turnaround trend among large-scale productions is expected to continue.”

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