1. What happened to Samhwa Networks?

Samhwa Networks’ revenue in the first half of 2025 decreased by 96.2% year-on-year to 600 million KRW, and operating profit turned to a loss of -1.2 billion KRW. The sharp decline in drama production revenue is the main cause.

2. Why the decline in performance?

A combination of external factors such as intensifying competition in the K-drama market, rising production costs, and decreasing investment, along with internal factors such as sluggish drama production and sales, contributed to the decline. In particular, Studio Icon’s zero revenue highlights the difficulties in new content production and sales.

3. What’s the financial status?

  • While total assets increased, total liabilities surged, leading to a significant rise in the debt ratio from 16.49% to 44.07%. This raises concerns about financial soundness.
  • Cash flow from operating activities is also at -2.9 billion KRW, indicating a severe cash outflow.

4. Future outlook and investment strategies?

Although Samhwa Networks has positive factors such as contracts with competitive writers/PDs, IP expansion, and new business models, there are also considerable negative factors such as the sharp decline in sales, financial deterioration, and high business uncertainty. Therefore, investment should be approached with caution, and factors such as future drama lineup, sales contracts, cash flow improvement, debt ratio reduction trend, and new business performance should be closely monitored.

5. Investor Action Plan

  • Short-term investors: Focus on checking for sales recovery and profitability improvement.
  • Long-term investors: Observe the possibility of success of new IP-based businesses and the trend of improvement in financial soundness over the long term.