[Edaily Reporter Kim Hyung-il ] SKSecurities noted that SM ENTERTAINMENT CO., Ltd.(041510)posted second-quarter earnings in line with market expectations and projected that the comebacks of major artists and the debut of the rookie group “SMTR25” in the second half of the year will serve as growth drivers. The firm maintained its “Buy” rating and target price of 120,000 won.

On the 6th, Park Jun-hyung, an analyst at SKSecurities, stated, “Second-quarter consolidated revenue was 349.6 billion won, and operating profit was 52.9 billion won, results that were in line with the market consensus (52.7 billion won).”

In the music division, album sales totaled 5,728,000 copies. This figure reflects sales of NCT WISH’s first full-length album (1,920,000 copies), RIIZE (1,400,000 copies), and aespa (1,060,000 copies); however, revenue declined slightly year-over-year due to a decrease in sales of new releases, the firm explained.

Revenue in the concert segment reached 41.6 billion won, exceeding expectations. Revenue growth was driven by expanded tours and larger-scale performances by veteran artists such as TVXQ!, SUPER JUNIOR, and EXO. Revenue from merchandise (MD) and licensing reached 77.9 billion won, significantly exceeding the estimate of 66.5 billion won. The firm attributed this to an increase in concert merchandise and pop-up events tied to artist comebacks, as well as online merchandise sales from NCT WISH’s “WISH BAKERY” pop-up.

SKSecurities stated that revenue growth is expected in the second half of the year, as NCT 127 is set to make a comeback to mark NCT’s 10th anniversary and Jaehyun’s discharge from military service, followed by comebacks from major artists such as SUPER JUNIOR 83z, Red Velvet, Taeyeon, and NCT DREAM. Revenue from intellectual property (IP) licensing resulting from a collaboration between aespa and PUBG Mobile is also expected to be reflected in the second half of the year, and is projected to serve as an additional growth driver for the licensing division.

However, the report noted that, with the exception of aespa, the company’s meaningful activities in the North American market remain limited, which is a point of concern. Analyst Park stated, “The initial commercial success of SMTR25, scheduled to debut at the end of the year, and the extent to which the agency’s artists expand into the North American market will serve as key variables for the company’s medium- to long-term enterprise value.”