Kiwoom Securities raises SM target stock price to 130,000 won... Expected performance growth next year

(Seoul = Yonhap News) Reporter Lee Min-young = On the 29th, Kiwoom Securities raised its target stock price for SM [041510] from 110,000 won to 130,000 won, saying that performance growth is expected next year as uncertainty over artist contracts is resolved.

The previous day's closing price was 82,300 won, down 0.36% from the previous day.

Researcher Lim Soo-jin said, “With NCT 127 renewing its contract in July of this year and NCT Dream renewing its contract in August, contract uncertainty regarding highly-annual IP (intellectual property), which contributes the most to sales, has been resolved.”

The fact that album sales by artists with less experience is expected to increase was also cited as a positive factor.

Researcher Lim predicted, "Next year's album sales will increase to 16.84 million units, of which 58%, or 9.84 million units, are expected to come from IPs that are 7 years old or younger, such as NCT Wish, Rise, and Hearts to Hearts," and added, "The number of concertgoers will also increase to 4.125 million next year and 5.029 million in 2028."

In addition, he predicted, “MD (goods products), licensing, and pictorial sales will increase from 231.6 billion won last year to 308 billion won in 2028,” and “Thanks to the increased proportion of low-year albums and MDs, the gross profit ratio will recover to 37.5% in 2028, the highest level since 2019.”

Accordingly, next year's annual operating profit is expected to be 228.3 billion won, exceeding the consensus (market average forecast, 216.1 billion won) by 5.6%. This is a 26% increase compared to this year’s annual operating profit estimate (KRW 181.5 billion).