by On the 13th, Kiwoom Securities predicted that Dear You (KRW 33,500 ▼ 350 -1.03%) would benefit the most from the expansion of the K-Pop World Tour, saying that the number of subscriptions is increasing. Therefore, we maintain our Buy rating and target price of 52,500 won.
Dear You’s flagship business, monthly subscription-type private message service ‘Dear You Bubble’, is a service that allows you to send and receive one-to-many messages with celebrities. SM (W78,800 ▼ 600 -0.76%) Entertainment’s non-music subsidiary SM Studios holds a 43.19% stake in Dear You.
Researcher Lee Nam-soo said, “We expect Dear You’s operating profit to rise by 93.6% year-on-year to KRW 4.7 billion in the fourth quarter,” adding, “The annual increase in the number of subscriptions is expected to continue in the fourth quarter, a 10% increase from the third quarter (1.45 million). It will reach 1.6 million people,” he predicted.
As of the third quarter, 65 agencies (Entertainment) and 362 artists from 119 teams are in Dear You Bubble.
Researcher Lee said, “Dear You’s business model depends on app market fees and entertainment payment fees linked to sales by subscription fees. Although the variable cost aspect is strong, sales growth is showing steady, so the business model will likely deteriorate due to one-off factors at a certain point in time. So isSo is low,” he said.
“Although the rate of payment to agencies has increased due to the growth of artists from JYP Entertainment and SM Entertainment, which have high fandom royalties, the subscription retention rate will be strengthened as the number of subscriptions increases at the same time.”
Researcher Lee said, “The K-pop world tour in 2023 △expansion of concerts from major artists to artists who can attract customers △expansion of the world tour area, which was concentrated in Korea, the United States, and Japan, to Southeast Asia and Europe △increase in the number of people per concert and large-scale venues Through utilization, it will establish itself as a strong growth momentum for entertainment,” he predicted. “Dear, You will benefit the most from expanding the world tour by further strengthening concert-oriented marketing.”
