[Click eStock] "BigHit 4Q Last Year Operating Profit Expected at 41.3 Billion Won...Below Expectations"

Increased Labor Costs Including Various Bonuses and One-Time Expenses Related to Office Relocation
BTS Remains Strong... Sufficient Momentum for Growth

BTS performing the "Dynamite" stage at the recent Big Hit Labels joint concert
[Image source=Yonhap News]

[Asia Economy Reporter Minwoo Lee] Big Hit Entertainment's operating profit for the fourth quarter of last year is expected to fall about 30% short of market consensus. This is due to one-time expenses such as various performance bonuses and office relocation costs.

On the 7th, KB Securities forecast that Big Hit would record consolidated sales of 284.7 billion KRW and operating profit of 41.3 billion KRW for the fourth quarter of last year. This operating profit is about 30.2% below the consensus of 59.1 billion KRW. Although record-high sales are expected due to BTS's album release of "BE," expenses increased due to various investments.

First, with the company's growth, labor costs and performance bonuses are expected to amount to about 30 billion KRW. Amortization expenses of intangible assets related to exclusive contracts from the acquisitions of Pledis and KOZ Entertainment were also added. Additionally, one-time costs such as office relocation expenses and listing fees of about 15 billion KRW were reflected. Stock compensation costs for artists are expected to occur at about 2.5 billion KRW per quarter until 2024. Excluding these one-time expenses, the fourth quarter operating profit is said to be in line with consensus.

Since BTS remains strong, there is analysis that future growth momentum is sufficient. KB Securities researcher Sunhwa Lee said, "BTS is challenging for a Grammy Award," and added, "Big Hit is undoubtedly an entertainment company with the world's best fandom, and if offline concerts resume this year, related sales will rapidly increase based on the large fandom."

Against this background, KB Securities lowered Big Hit's target stock price by about 12%, from 256,000 KRW to 226,000 KRW, but maintained a "buy" rating considering the upside potential. The closing price the previous day was 158,500 KRW.

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