The writer is an analyst at NH Funding & Securities. He will be contacted at [email protected] –Ed.
Because the primary distributor of Korean Wave content material in Japan, Copus Korea will profit from increasing the streaming portion for Korean Wave content material on Japanese OTT platforms. The corporate’s content material manufacturing enterprise can be poised to take a leap ahead, with three new dramas deliberate for this 12 months.
A heat breeze from Japan
Copus Korea buys IP from dwelling content material builders/broadcasters, customizes it and distributes it to main Japanese broadcasters, DVD distributors and OTT platforms. As Korea’s overseas coverage stance in the direction of Japan below the brand new authorities is anticipated to alter positively, the corporate’s enterprise momentum is anticipated to develop. The corporate has been distributing Korean Wave content material, together with dramas, leisure exhibits, and internet novels/webtoons, to Japan for 17 years, establishing itself as a market chief.
Taking a look at Copus’ content material distribution enterprise, the ratio of recent to previous work is 3:7 by way of gross sales, and its renewal charge is excessive. The distribution enterprise has a GPM of over 50% and is anticipated to proceed its position as a money cow going ahead. The rise within the streaming portion for Korean Wave content material in Japan will additional profit the corporate.
Drama manufacturing begins this 12 months
Leveraging its steady dairy enterprise, Copus can be increasing its drama manufacturing enterprise. Final 12 months, the corporate proved its manufacturing functionality by way of the manufacturing of Dali and Cocky Prince (airing on KBS 2TV; Wednesday/Thursday). Based mostly on that, it’s producing three extra dramas (to be aired on a worldwide OTT, a home OTT, and a common programming channel) this 12 months. Sooner or later, Copus plans to additional strengthen its manufacturing capabilities by buying a manufacturing firm. Gross sales for the brand new enterprise are conservatively estimated at round W14bn in 2022.
We forecast gross sales in 2022 of W46.9 billion (+38.7% pa) and OP of W11.4 billion (+10.7% pa, OPM of 24.3%). The inventory is at the moment buying and selling at a 2022E P/E of 14.8x, a gorgeous degree contemplating the corporate’s accolade because the primary distributor of Korean wave content material in Japan, expectations for normalization of Korea-Japan relations and the ramp-up of the corporate’s manufacturing enterprise.