Meritz Securities said on the 3rd that SOOP(067160) needs a clear business inflection point. It maintained its investment opinion at neutral (Hold) and lowered the target price to 51,000 won from 76,000 won. SOOP's previous day's closing price was 48,000 won.
Earlier, on a consolidation basis, SOOP's second-quarter revenue and operating profit were 103.8 billion won and 12.6 billion won, respectively. They fell 11.2% and 57.9% from a year earlier, significantly missing the consensus (the market's average forecast).
Content advertising had an impact close to 1.5 billion won, and one-off expenses such as a tax audit appear to have had an effect. SOOP said it could not disclose the size of the expense.
Lee Hyo-jin of Meritz Securities said, "SOOP has released a shareholder return plan to use at least 25% of consolidated net profit over the next three years as a source for dividends," adding, "With the core business sluggish, dividends act as a rock bottom for the share price, but if the business profit falls short of expectations when the return ratio is fixed, it loses the power to support the bottom."
SOOP is planning three items for the second half. First, it is preparing policies to attract new streamers and said it would share specifics within the third quarter. Second, it said it would improve the user environment, such as language barriers, by enhancing the user interface (UI) and user experience (UX). Third, it said it plans to launch a new brand with its advertising subsidiary.
The analyst added, "With the removal of the second-quarter tax audit expense, a quarter-over-quarter rebound in third-quarter profit is possible," but added, "However, in a business structure essentially trapped in domestic demand, reverse leverage shows no clear breakthrough."
In particular, it assessed that the performance of the global platform, which the market had expected, is still minimal, and the pace at which the domestic business is becoming difficult is faster than expected.
The analyst said, "Rather than the view that the price is approaching the bottom, we maintain our existing neutral view that a clear business inflection point is needed."