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Korean contents

Studio Dragon turns heads on promising outlook

By Nov 27, 2020 (Gmt+09:00)

Teaser for Netflix Original drama series Sweet Home (Courtesy of Netflix)
Teaser for Netflix Original drama series Sweet Home (Courtesy of Netflix)

South Korea’s leading drama production house Studio Dragon Corp. is in the market limelight as it readies to reenter the Chinese market alongside the upcoming release of its latest drama series Sweet Home.

On Nov. 26, Studio Dragon closed at 80,800 won ($73), up 0.62% on the junior bourse Kosdaq. This month alone, the company's share price has climbed by 3.32%.

The stock market has been on a rollercoaster ride this year due to the impact of the COVID-19 crisis. Meanwhile, Studio Dragon has been relatively less volatile as the range between its lowest price (69,300 won) and its highest price (92,500 won) so far this year has hovered around 34 percent.


TvN drama Crash Landing on You, the most-viewed series on Netflix Japan
TvN drama Crash Landing on You, the most-viewed series on Netflix Japan


The market has credited the low volatility to the nature of drama production. Unlike movie theaters or concerts in which audience numbers are directly tied to number of performances, Studio Dragon’s revenue mostly stems from production programming for broadcasting companies (45%) and content sales to both domestic and overseas distributors (47%).

Such factors are behind the securities industry's hopeful view on sales in China.

“Studio Dragon sold two dramas to China in the third quarter, of which some 6 billion won were counted as revenue,” said Kim Hoi-jae, an analyst at Daishin Securities Co. He emphasized that this marked the first time that the studio sold content to China since the ban on the Korean wave (hallyu: global popularity of Korean culture, media, entertainment).

The securities industry also expects the Netflix release of Sweet Home, a drama series based on a popular webtoon of the same name, to be another turning point. Studio Dragon has injected around 25 billion won into production costs for the show, the highest amount for this year. The series is set to air in December.

Naver webtoon Sweet Home (Courtesy of Naver Webtoon)
Naver webtoon Sweet Home (Courtesy of Naver Webtoon)

In recent years, the rise in over-the-top (OTT) services has lifted global popularity of Korean dramas, which have become a worldwide phenomenon amid the coronavirus pandemic. The increased appetite for Korean content has nudged overseas studios to reach out to domestic production companies for potential collaboration.

“Instead of just relying on Netflix to sell its dramas to overseas markets, Studio Dragon now has the bargaining power to negotiate businesses with other global OTT players,” said Choi Min-ha, an analyst at Samsung Securities Co.

According to financial data provider FnGuide, around 20 domestic securities firms have set the company’s average price target at 108,900 won ($99), about 34.77% higher than the current share price.

Market consensus for the company’s operating profit in 2021 stands at 69.2 billion won ($63 million), up 23.38% from this year.

In the third quarter, the company posted 106.3 billion won in revenue and 16 billion won ($14.5 million) in operating profit, up 46.8%.

Write to Bum-jin Chun at forward@hankyung.com

Danbee Lee edited this article.

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