Samsung Securities predicts that SM Entertainment (041510) will continue to improve its earnings in the mid to long term, thanks to the growth of next-generation artist intellectual property (IP) and expansion in Greater China. They maintain a Buy rating with a target price of ₩105,000 (about $78), reflecting a 31.4% increase over the previous closing price of ₩79,900 (approx. $60).
Choi Min-ha, an analyst at Samsung Securities, emphasizes the global tour expansion of aespa as a key growth driver, along with rising stars like RIIZE, NCT WISH, and Hearts2Hearts. aespa’s fourth world tour is set for 25 regions from August to February, while RIIZE has already drawn 420,000 attendees on its first tour.
The upcoming boy group SMTR25 is expected to debut this year with a solid pre-existing fanbase, thanks to a reality TV program and fan events. In Greater China, SM Entertainment’s joint venture with Tencent Music Entertainment (STE) aims to cultivate local idols, leveraging Tencent’s distribution.
Additionally, SM opened SMTOWN STORE Shanghai, its first permanent store in China, to bolster local engagement and merchandise sales. Subsidiary profitability improvements, particularly through concert production and increased Japanese activities, are also noted as supportive factors.
For next year, Samsung Securities forecasts consolidated revenue of ₩1.37 trillion (about $1.0 billion), a 9.7% increase, and an 18.1% rise in operating profit to ₩217.1 billion (approximately $161.9 million). Choi advised focusing on structural growth rather than short-term fluctuations.
