[Company Insight] SAMG to Leap as Korea's Disney... Plans to Surpass 200 Billion KRW in Sales in 2024

Investment in content production and distribution using funds raised through IPO
Expansion of business areas in IP-based toys, fashion, and education

[Asia Economy Reporter Hyungsoo Park] 3D animation production company SAMG Entertainment (SAMG) is entering the domestic stock market. SAMG presented a blueprint to leap forward as the 'Disney of Korea' with its listing on the KOSDAQ market. The company plans to surpass 200 billion KRW in sales in 2024 by investing the proceeds from the public offering into content production and distribution businesses.

SAMG will issue 1.75 million new shares for its initial public offering (IPO). The expected price range is set between 21,600 and 26,700 KRW per share. The anticipated amount to be raised is approximately 37.8 billion to 46.7 billion KRW. From the 1st to the 2nd of next month, a two-day demand forecast will be conducted targeting institutional investors to finalize the offering price. The company plans to debut on the KOSDAQ market by the end of next month, with NH Investment & Securities acting as the lead underwriter.

Founded in 2000, SAMG is the company with the most experience in 3D animation production in Korea and possesses the largest proprietary intellectual property (IP) library. CEO Kim Suhoon decided to start the company after watching Pixar’s animation 'Toy Story.' He self-studied overseas books related to 3D animation and participated in planning and producing 23 TV animations and 11 theatrical animations produced by SAMG. Based on CEO Kim’s passion, SAMG has grown into Korea’s largest 3D animation production studio. It has the capability to oversee marketing and content businesses centered on production responsible for animation planning and production. In 2019, it received the Presidential Citation for Overseas Expansion from the Ministry of Culture, Sports and Tourism.

SAMG co-produced 'Ladybug,' which gained popularity in European and Latin American markets. Leveraging over 20 years of accumulated technology, it owns proprietary IPs such as 'Mini Force,' 'Catch! Teenieping' series, and 'Super Dino.' Last year, it introduced the digital idol 'Lulupop,' steadily expanding its content domain.

By showcasing its content on new media channels, SAMG is laying the foundation for overseas market expansion. Currently, it operates 42 YouTube channels, including 15 domestic and 27 overseas channels, with a total subscriber count exceeding 39 million. SAMG recorded sales of 31.9 billion KRW in the first half of this year, a 150% increase compared to the same period last year. It achieved nearly 38.4 billion KRW in total sales last year. Operating profit turned positive at 2 billion KRW in the first half of this year.

Based on its know-how in kids content IP business, SAMG is expanding its business areas using its IP lineup, including toy planning and production, character licensing and merchandising, global distribution, and theatrical and OTT distribution. Starting this year, it is pursuing direct business in various fields such as launching food and beverage (F&B) products using popular IPs like 'Catch! Teenieping,' launching the kids fashion brand ‘Emotion Castle Kids,’ and developing kids theme parks.

Recently, SAMG strengthened its digital content production capabilities by acquiring game developer Enterreal. It is solidifying its position to leap forward as a ‘comprehensive kids content platform company’ by jointly promoting kids character IP business with LG Uplus.

The funds raised through the IPO will be used for content production and research and development expenses. The company plans to invest in hiring internal content personnel and discovering small to medium-sized production companies that can collaborate with SAMG. It also plans to invest in producing excellent domestic and overseas content and securing business rights. Research and development will be pursued to actively utilize game engines that can improve work efficiency and reduce production costs during animation production.

Mergers and acquisitions (M&A) will also be conducted to raise IP brand awareness and expand business areas through direct distribution business. Investment reviews are focused on capable small to medium-sized companies that can utilize the company’s IP. The company stated that discussions are ongoing.

NH Investment & Securities, the lead underwriter, selected Daewon Media, Fan Entertainment, Ace Story, and Studio Dragon as the final comparable companies to calculate SAMG’s appropriate offering price. An average price-to-earnings ratio (PER) of 26.21 times and a discount rate applied to next year’s net income were used. The per-share valuation was calculated at 38,371 KRW. SAMG’s estimated sales are expected to reach 83.2 billion KRW this year, 139.5 billion KRW in 2023, and 215 billion KRW in 2024. As sales increase, net profit is also projected to reach 17.8 billion KRW in 2023 and 26.5 billion KRW in 2024. Sales of toys, fashion, cosmetics, and books using IPs such as Mini Force, Catch! Teenieping, and Super Dino Rex Team are expected to grow sharply. The company is also pursuing ways to increase profitability by internalizing product development and production.

CEO Kim Suhoon of SAMG said, "Based on our powerful IP, we have internalized the capability to directly operate in a wide range of fields including toys, fashion, education, and theme parks beyond animation." He added, "We will accelerate overseas content business and leap forward as the 'Disney of Korea.'"

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