On 17th, DS Investment & Securities said Knowmerce, a company specializing in artist intellectual property (IP) solutions, is reorganizing its business structure around high-margin concerts, and expectations are high for results coming from China.
At the same time, it raised its target price by 22% to 44,000 won from 36,000 won and maintained its "buy" investment opinion. Knowmerce's closing price in the previous trading day was 31,500 won.
Knowmerce signed a business cooperation agreement with Hunan Provincial Government–owned media group (HBS) to enter China across its entire business, including not only platforms but also concerts and commerce. Mango TV, the online video service (OTT) under HBS that signed the agreement, is the No. 3 OTT in China, with 250 million paid subscribers, suggesting a stable service launch is likely.
Cho Dae-hyeong, a researcher at DS Investment & Securities, said, "As recent concerts in China have been postponed, there is skepticism that the company's collaboration may have only a limited impact on results," adding, "But the company has already successfully held a fan meeting in China." Cho projected that in China next year, Knowmerce will post at least 15 billion won in revenue even without concerts.
DS Investment & Securities estimated Knowmerce's third-quarter revenue and operating profit this year at 28.2 billion won and 6.3 billion won. That represents increases of 5.2% and 75.6%, respectively, from a year earlier.
Reflecting the results from the world tour of a mega intellectual property (IP), which had been expected to proceed in the second half, has been pushed to next year, but even without that tour, the total number of concerts is projected to increase to 176 this year from 110 last year.
Cho said, "It is time to raise expectations for next year's results, when the world tour of the mega IP and China revenue will be added to the strengthened fundamentals."