[Click eStock] "SM, Stock Momentum Expected to Increase Toward Year-End"

Expectations for MD Renewal and Artist Comebacks Despite Album Decline
Q2 Operating Profit Expected to Be Lower Than Consensus
Anticipation for UK Boy Group and Korean Girl Group in Second Half

Hana Securities analyzed on the 18th that despite the downward revision of the earnings consensus (average forecast) for SM, the stock price momentum is expected to increase toward the end of the year. They maintained a 'Buy' investment rating and a target price of 110,000 KRW. SM closed at 80,000 KRW on the previous trading day.

Researchers Kihoon Lee and Jiwon Hwang from Hana Securities stated, "As the decline in album sales continues, both the Q2 and annual earnings consensus are trending downward. However, the stock price momentum is expected to strengthen toward the end of the year."

SM is expected to see an expansion in secondary copyright sales in the second half of the year due to the renewal of MD (merchandise related to specific events or figures). In Q4, artist comebacks are expected to be concentrated. The simultaneous debut of a Korean girl group and a British boy group is also anticipated. The two researchers said, "The current stock price is valued at an expected price-to-earnings ratio (P/E) of 15 to 16 times, making it a good investment opportunity in the second half of the year."

The expected operating profit for Q2 is 35 billion KRW, which is likely to fall short of the consensus. Stable earnings growth is expected as major artists' comebacks and NCT Dream's tour are factored in. In Q3, major concerts will be held during the Olympic period, with profits expected to remain at a similar level. In Q4, earnings are expected to improve due to artist comebacks.

The British boy group co-produced by SM and the UK’s M&B is scheduled to be broadcast as a TV series on BBC in Q3, with plans to debut within the year. Researchers Kihoon Lee and Jiwon Hwang said, "A Korean rookie girl group is also preparing to debut within the year, and a successful debut is expected to provide positive momentum in terms of future earnings and valuation."

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