The Korea Herald


Analysts divided over Big Hit's target prices

By Yonhap

Published : Oct. 2, 2020 - 15:37

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This photo, provided by Big Hit Entertainment on Sept. 21, 2020, shows K-pop group BTS performing on the This photo, provided by Big Hit Entertainment on Sept. 21, 2020, shows K-pop group BTS performing on the "Tiny Desk Concert" show on National Public Radio in the United States. (Yonhap)

South Korean analysts offer a wide range of target prices for Big Hit Entertainment, an agency of K-pop superstar BTS, ahead of the company's market debut slated for this month.

Big Hit Entertainment's listing, set for Oct. 15, is one of this year's mega IPO deals, thanks to the K-pop septet's global fame.

The initial public offering (IPO) price was set at 135,000 won ($115), but analysts' target prices range from 160,000 won to 380,000 won.

Brokerage houses' forecasts vary over how the company will perform in the pandemic-hit entertainment markets.

Last week, the agency decided to switch BTS' "BTS MAP OF THE SOUL ON:E" concert to an online event. It said offline performances were "technically impossible," as long as the government ban on mass conventions and gatherings continues.

Hana Financial Investment, which suggested the highest target price, said online concerts are unlikely to hurt the agency's revenue.

"Prior to the COVID-19 outbreak, BTS had already experienced online tour and V-LIVE performances during the 2019 Wembley Stadium concert," Hana Financial Investment analyst Lee Ki-hoon said.

"We assume that (Big Hit's) content sales will grow regardless of COVID-19, considering BTS' massive global fandom and its ability to fill up three stadium-scale concerts per city," he said.

But some brokerages put more weight on long-term risks, such as the agency's heavy dependence on BTS

"BTS' intellectual property is subject to the artists, not the company," Meritz Securities Korea analyst Lee Hyo-jin said.

BTS accounted for 98.2 percent of the agency's annual sales in 2018 and 97.4 percent in 2019, according to the agency data.

In response, Big Hit has been spurring efforts to diversify its business portfolio through its acquisition and content platform business.

Big Hit Entertainment has built up its own K-pop empire since it was founded in 2005 by former JYP Entertainment producer Bang Si-Hyuk.

After the IPO, Bang will be the company's largest shareholder with a 36.6 percent stake. Game publisher Netmarble will hold a 20.9 percent stake, with 16.9 percent being publicly owned.

Last year, the agency's annual sales almost doubled to 587.2 billion won, with an operating profit of 98.7 billion won. (Yonhap)