[Click eStock] BigHit Expects 500 Billion KRW Revenue in Second Half... "Stock Price Underperformance Is Excessive"

Hana Financial Investment Report

[Asia Economy Reporter Minji Lee] Opinions have emerged that the current stock price level is sluggish when assuming Big Hit's second half sales to be around 500 billion KRW.

According to Hana Financial Investment on the 19th, Big Hit's sales for the second half of this year are 498 billion KRW, and operating profit is 73.4 billion KRW. This is higher than the securities industry's expected sales (396.8 billion KRW) and operating profit (68.3 billion KRW), excluding Hana Financial Investment. Hana Financial Investment's expected sales for this year are 792 billion KRW and 1.513 trillion KRW for next year.

On the first day of Big Hit Entertainment's KOSPI listing on the 15th, a listing ceremony was held in the lobby on the first floor of the Korea Exchange in Yeouido, Seoul. (From left) Taejin Park, CEO of JP Morgan Seoul Branch; Jiwon Park, HQ CEO of Big Hit Entertainment; Seokjun Yoon, Global CEO of Big Hit Entertainment; Siyuk Bang, Chairman of Big Hit Entertainment; Jiwon Jung, Chairman of Korea Exchange; Jaejun Lim, Head of the Korea Exchange Securities Market Division; Youngchae Jung, CEO of NH Investment & Securities; Seongchae Ra, Deputy Head of the Korea Exchange Securities Market Division / 2020.10.15. Photo by Joint Press Corps

Lee Ki-hoon, a researcher at Hana Financial Investment, said, "If we proceed as usual, this year's and next year's sales forecasts are about 44% and 52% higher, respectively, than estimates excluding our company," adding, "We tried to lower the estimates, but no matter how much we reduce them, this year's sales are not expected to fall below 750 billion KRW."

The expected sales for the second half are estimated to be 498 billion KRW, about 26% higher than market expectations. In the second half, BTS's November comeback albums, 'BE (Deluxe Edition)' and 'Skool Luv Affair,' are priced at 39,400 KRW, more than twice the price of previous albums. The previous work, 'MAP OF THE SOUL_7,' sold 4.3 million copies. Assuming the two albums in November sell 3.8 million copies, 20% lower than that, and adding BTS's older works (1 million copies), Seventeen (1.7 million copies), GFriend, NU'EST, and TXT (770,000 copies), the total is 7.3 million copies. Through this, sales of 180 billion KRW are expected, and adding Japanese albums and music, sales are estimated at 234.8 billion KRW.

The other management sector, reflecting advertising, appearance fees, and fan clubs, is estimated to increase by 13% to 39 billion KRW compared to the first half. The MD/license sector is expected to generate sales of 159 billion KRW. However, if events such as BTS online fan meetings do not occur, there is an additional downside potential of 30 billion KRW. Revenue related to videos such as online concert tickets is expected to reach 65 billion KRW, reflecting online concerts, Seventeen, GFriend, NU'EST online fan meetings, other VOD, and movie sales.

Even considering BTS's military enlistment hiatus, the current stock price is analyzed to have fallen excessively. BTS member Jin enlisted at the end of 2021, and Suga is scheduled to enlist at the end of 2022. Researcher Lee Ki-hoon explained, "The market says Big Hit's sales should decrease from 2022, but until the end of 2022, the enlistment gap is only one member, Jin, so it is reasonable to assume concert sales at maximum." Looking at previous cases of TVXQ and Big Bang, the sales gap due to their enlistment was significant, but in Big Bang's case, the number of attendees at Japanese concerts before enlistment ranked first. He continued, "Rather, the period when concerns about the gap increase is from 2024 to 2026, when 1994-born members RM and J-Hope are scheduled to enlist. Since there are three years left, the current market concerns are excessive."

Finally, researcher Lee Ki-hoon said, "If second half sales fall below 400 billion KRW, the current stock price level would be appropriate, but at this point, I believe the performance is underestimated," and added, "I maintain a buy rating and a target price of 380,000 KRW."

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