NH Investment & Securities announced on August 6 that it is maintaining a "buy" rating and a target price of 109,000 won for SM Entertainment, citing the company's second-quarter performance meeting market expectations and strong sales of albums and merchandise across its artists.
Lee Hwa-jung, a researcher at NH Investment & Securities, stated, "All generations of intellectual property are contributing to revenue, from lower-tier to legacy IP. aespa, RIIZE, and NCT Dream are generating stable income based on solid fan bases, while Hearts to Hearts has also entered the monetization stage."
The firm also highlighted the potential for SM Entertainment's expansion in the Chinese market. Lee noted, "SM was included in the economic delegation during the Korea-China summit in January and opened the first offline merchandise store in China in April. If performances in China resume, the company stands to benefit significantly."
For the second quarter, SM Entertainment reported consolidated revenues of 349.6 billion won and an operating profit of 52.8 billion won, marking increases of 15.4% and 10.9%, respectively, compared to the same period last year. Key album sales included 1.92 million copies for NCT Dream, 1.4 million for RIIZE, 1.06 million for aespa, and 620,000 for Hearts to Hearts. Concerts, including five by aespa and 19 by EXO, also contributed to increased merchandise sales.
Lee added, "SMTR25 is proactively securing its fan base through pre-debut activities. Although increased marketing costs have slightly diluted short-term profitability, rapid monetization is expected post-debut."
NH Investment & Securities forecasts SM Entertainment's annual revenue and operating profit for this year to be 1.309 trillion won and 193.9 billion won, respectively.
* This article has been translated by AI.
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