[Click e-Stock] Stocks with Fundamentals Headed to the 'Next Level'

Samsung Securities has lowered its target price for SM Entertainment from 114,000 won to 105,000 won. However, the company maintained its "Buy" investment rating.

On September 9, Choi Minha, Senior Research Analyst at Samsung Securities, stated, "It is time to focus on structural improvements to SM Entertainment's earnings power rather than short-term earnings volatility."

SM Entertainment's growth momentum is being strengthened by improved profitability in its subsidiaries and the expansion of its artist lineup. Choi commented, "Dream Maker is seeing a clear improvement in both operating results and profit margin thanks to increased collaborative projects with the headquarters, while SM Entertainment Japan is expected to achieve topline and profit growth due to more active artist activities in Japan. In addition to NCT's achievements as they mark their 10th debut anniversary with various promotions, recently debuted artists are showing rapid growth, and there are plans to launch new boy groups aiming to debut within the year, as well as localized groups in Thailand, Japan, and China."

Choi also noted, "Aespa began their fourth world tour last month, which covers 25 regions through February next year and is expanding both its geographical reach and audience size. Moreover, Riize, who is celebrating their third debut anniversary, has proven their potential by attracting 420,000 attendees on their first world tour." He added, "It is also important to watch the progress of the new boy group project 'SMTR25,' which is scheduled to officially debut within the year."

Business expansion in Greater China is also accelerating. SM Entertainment has established a joint venture (JV) called 'STE' with Tencent Music Entertainment (TME) in China, and aims to enter idol management in the local market with a debut target within 2 to 3 years. Choi noted, "Leveraging the local platform and distribution infrastructure of TME, which is SM Entertainment's second-largest shareholder, the company is expected to expand the reach of its artists in Greater China."

Choi forecasted, "The 'SMTOWN STORE Shanghai,' an MD flagship store that officially opened in the second quarter of this year, will serve as a key hub for boosting local brand awareness and expanding the fan base, and will lead to structural growth of MD-related revenues."

This content was produced with the assistance of AI translation services.