[Click eStock] BigHit, Platform Expansion and Label Acquisition Success... Target Price Up

[Asia Economy Reporter Lee Seon-ae] Yuanta Securities announced on the 5th that it maintains a 'Buy' rating on Big Hit and raises the target price from the previous 260,000 KRW to 350,000 KRW. The new target price of 350,000 KRW was calculated by applying a price-earnings ratio (PER) of 65 times to the expected earnings per share (EPS) of 5,326 KRW for 2021. The PER of 65 times is a figure derived by applying a 20% premium to Warner Music's expected PER of 54.1 times in 2021.

Big Hit is expanding the utilization area of artist IP across the global entertainment market (music + publishing + comics + games + movies + drama/variety shows + character/license) by leveraging its entertainment platform Weverse, and the size of these markets reaches a staggering 1,300 to 1,400 trillion KRW.

In January, Big Hit attracted investment from Naver into BNX, the operating company of Weverse, and BNX decided to acquire Naver's V Live business, announcing the launch of an integrated platform combining Weverse and V Live. Additionally, by investing in YG Plus, Big Hit formed a tripartite alliance connecting Big Hit, Naver, and YG Entertainment.

In February, Big Hit established a joint venture, KBYK Live, with YG Entertainment, Kiswe, and Universal Music Group (UMG), jointly owning the digital live streaming concert platform VenewLive. This incorporated VenewLive as a captive streaming platform within Weverse. Furthermore, Big Hit established Bighit Universal (JV) with UMG's Geffen Records. Bighit Universal plans to launch a new boy group through a global audition in the future. Through the acquisition of Ithaca Holdings, Big Hit has laid the foundation to become the world's largest music company.

Meanwhile, Big Hit changed its corporate name to HYBE at the regular shareholders' meeting on the 30th of last month. On the 1st, HYBE decided to establish Big Hit Music through a physical division. HYBE will focus on all businesses except the label business, while Big Hit Music will concentrate on the label business division. HYBE will act as a de facto holding company, managing multiple labels and investing in platforms and solutions. Although Big Hit's revenue structure heavily concentrated on BTS was considered a risk factor around its 2020 IPO, it has attracted attention in 2021 by achieving remarkable results in both platform expansion and label acquisitions.

Researcher Park Sung-ho of Yuanta Securities stated, "Big Hit's performance is expected to weaken compared to the previous quarter due to a temporary decrease in artist activities, but since future growth potential is actually increasing, it is judged that an active increase in weighting should be pursued."

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