SM Entertainment's earnings slow in the second half; tours to expand and rookies expected to make a splash next year

[Financial News] On the 5th, iM Securities lowered its target price for SM Entertainment by 8% to 110,000 won, reflecting an earnings gap in the second half. It maintained its “Buy” rating.
Ji-won Hwang, an analyst at iM Securities, said, “A short-term earnings gap has become apparent as major groups have reduced global new album releases and touring activities in the second half, while aespa has focused its promotions on Western markets.” Third-quarter revenue was 291.1 billion won and operating profit was 35.5 billion won, down 10% and 26%, respectively, from a year earlier, but in line with market expectations.
Hwang forecast, “Earnings momentum is expected to strengthen next year as global activities expand in earnest.” He cited NCT WISH’s 22-show arena tour in the first half, RIIZE’s resumption of its world tour after releasing a full-length album in the first quarter, and aespa’s Asia tour as key drivers.
He also expressed optimism about the rookie boy group. Hwang said, “The rookie boy group is building a fan base even before its debut through pre-debut content, including variety shows following its growth and fan meetings, raising expectations for early success,” and analyzed, “If its musical concept, differentiated from those of existing boy groups, takes shape, it will also accelerate the influx of new fans.” He added, “Given the decline in valuations across the industry, share prices are expected to move sideways for the time being, but the rookie group’s success next year will act as a catalyst for a stock rebound.”

[email protected] Choi Doo-seon Reporter