[Edaily Reporter Kwon Oh Seok ] EUGENE INVESTMENT & SECURITIES announced on the 15th that it is maintaining its “Buy” investment rating on SM ENTERTAINMENT CO., Ltd.(041510)but lowering its target price from 130,000 won to 110,000 won.

Lee Hyun-ji, an analyst at EUGENE INVESTMENT & SECURITIES, stated, “With the sequential comebacks of artists such as NCT WISH, aespa, RISE, and Hearts to Hearts expected to drive robust album sales, we also forecast growth in concert revenue, bolstered by large-scale tours by veteran artists including aespa, SHINee, Super Junior, EXO, and TVXQ.”
She continued, “Merchandise sales are also expected to post solid results, driven by strong performance of concert-related merchandise, as well as the deferred recognition in the second quarter of pre-order volumes from the NCT WISH pop-up event held in the first quarter,” forecasting second-quarter revenue of 325.5 billion won (up 7.5% year-over-year) and operating profit of 51.9 billion won (up 9.0%), in line with market consensus.
The analyst elaborated, “While global activities are expected to be somewhat limited in the third quarter as most of the agency’s artists focus on activities in Japan, the gap is expected to be filled by NCT 127’s album comeback—marking their 10th anniversary this year—and their scheduled Asian tour, as well as the full-scale launch of aespa’s global tour.”
As an encouraging sign, the analyst noted that the recently announced aespa world tour consists entirely of dates in Western regions—including North America, South America, and Europe—with the exception of three shows in South Korea and Taiwan. He emphasized, “SY CO., LTD.’s recently released full-length album title track ‘Lemonade’ debuted at No. 7 on the Billboard Bubbling Under Hot 100 chart, building recognition in the North American market, we expect their fanbase to expand in Western markets.”
He added, “We expect a significant improvement in profitability this year, as revenue from the aespa x PUBG Mobile collaboration and related item licensing is expected to be recognized in the third quarter.”
With a new boy group scheduled to debut in the fourth quarter, the company viewed the stable growth driven by a diverse artist portfolio—ranging from established to emerging artists—as a positive sign. However, the company noted, “As costs associated with the new group’s debut and the artists’ global activities are expected to ramp up in earnest starting next year, we are slightly lowering our earnings estimates for the second half of the year and adjusting our target stock price downward.”
They added, “While the absence of a major artist to drive revenue growth is somewhat disappointing, it is positive that the company’s expansion into North America—which had been a source of concern in the market—is gradually expanding, starting with aespa and RISE. Furthermore, in addition to the rapid growth of junior artists, the stock offers attractive valuation at a 12-month forward P/E ratio of 11.6x.”