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[Alpha Biz=(Chicago) Reporter Paul Lee] Kyobo Securities lowered SM's target price from 180,000 won to 145,000 won on the 21st.
The background is that the sharp drop in the joint purchase of Chinese albums, which continued throughout the entertainment industry, and the initial sales of the fourth SPA mini album, which was released on the 10th, were sluggish compared to the previous one. However, the investment opinion maintained its "buy" as it judged that the growth of fandom in other overseas regions would continue.
"The initial sales of the fourth SPA mini album (sales for a week after the release of the album) fell 33.4% compared to the previous one, with the stock price falling 21.6% in a month," Kyobo Securities said. "The sluggish joint purchase of Chinese albums has also led to a drop in the stock price of SM, which has intellectual property (IP) with high exposure to China compared to other companies such as EXO, NCT and aespa."
Regarding the fall in the target stock price, Kyobo Securities explained, "Based on the assumption of conservative album sales, the company lowered its operating profit estimate by 19.7% for next year and lowered its target stock earning ratio from 27 times to 23 times," adding,"Governance issues due to rejection of shareholder proposals." “It reflects the average price-to-earnings ratio (PER) of 2019, when stock prices were sluggish due to the emergence of regional risks due to trade sanctions in Japan and Japan.”
Kyobo Securities predicts SM's operating profit will increase by 30.3% next year compared to this year. SM's sales in the third quarter were 266.3 billion won, up 11.8% from a year earlier. Operating profit rose 69.4% over the same period to 50.5 billion won.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
