NH Investment & Securities said on the 7th that Studio Dragon(253450) beat the consensus (market average forecast) for second-quarter results, noting the company is overcoming the industry downturn. It maintained a Buy rating and a target price of 32,000 won. Studio Dragon's previous closing price was 24,500 won.
Lee Hwa-jung of NH Investment & Securities said, "We focus on the solid results amid a sluggish industry," adding, "To raise selling prices, the company is improving sales terms and expanding ancillary sales, diversifying platforms to increase the number of episodes aired, and enhancing cost efficiency in production to improve profitability."
It also explained that improving the mid- to long-term visibility of quarterly results by changing the useful life of distribution rights is another positive factor.
Specifically, Studio Dragon is strengthening awareness of its titles to boost bargaining power for higher selling prices and optimizing per-title profitability by expanding intellectual property (IP) ancillary revenue. Securing overseas distribution channels through the Tving brand section is also seen as positive.
The annual number of episodes aired is expected to be 25, up 31% from a year earlier. For production costs, efforts to improve cost efficiency by title are ongoing. In particular, it said it is aligning the useful life of distribution rights with the revenue recognition period to stabilize quarterly profitability.
Studio Dragon's second-quarter revenue on a consolidation basis was 145.3 billion won, and operating profit was 15.4 billion won. Revenue rose 27% from a year earlier, and operating profit swung to a surplus.
The researcher said, "The company posted strong results thanks to improved sales efficiency and efforts to cut production costs."