One Week Left for Demand Forecast... What Are the Investment Points for BigHit?

Yuanta Securities Estimates Big Hit's Fair Corporate Value at 6.59 to 7.91 Trillion Won

[Asia Economy Reporter Kum Boryeong] As the demand forecast date for Big Hit Entertainment (Big Hit), considered the biggest IPO of the second half of the year, approaches in one week, market attention is focused on the investment points of Big Hit.

According to the financial investment industry on the 16th, Big Hit's demand forecast will be held on the 24th and 25th. Briefings for major domestic and foreign institutions have been conducted online since the 14th. Before the demand forecast, more than 100 briefings including conference calls and online investor relations (IR) sessions will be held. Considering that companies preparing for listing usually hold about 40 to 50 briefings domestically and internationally, this shows how great the interest in Big Hit is. An IRQudus official in charge of Big Hit's IR explained, "Although the demand forecast results have yet to come out, the attendance rate at the briefings is high," adding, "You can feel the passionate enthusiasm for Big Hit's listing."

The corporate value of Big Hit, as judged by securities firms, approaches 8 trillion won. Yuanta Securities estimated Big Hit's appropriate corporate value to be between 6.59 trillion won and 7.91 trillion won.

Big Hit's biggest investment point is revenue diversification through derivative content offerings. In addition to existing revenue models such as music and concerts, it is expanding sales through indirect artist participation revenue models such as publications, webtoons, games, and characters utilizing artist intellectual property (IP). Park Seong-ho, a researcher at Yuanta Securities, analyzed, "Since BTS has emerged as a global IP, IP can be utilized in all content areas and character businesses," adding, "The great advantage is that high-margin revenue sources can be secured through licensing and MD businesses without bearing significant risks related to content production costs."

The growth of its own platform, 'Weverse,' is also remarkable. The total number of Weverse subscribers surged from 2.6 million last year to 8.6 million last month. Monthly active users (MAU) also increased significantly from 600,000 in October last year to 4.7 million last month. Previously, concert tickets, albums, and MD purchase channels were separate, but unifying the consumption channel through Weverse has improved fans' purchasing convenience, and as convenience increases, consumption related to artists is naturally expected to rise.

Additionally, there is a high possibility of growth through acquiring other entertainment companies. Big Hit already acquired Source Music last year and Pledis in June. The securities registration statement also stated that it is pursuing acquisitions of competitive domestic and foreign labels.

However, the risk of high revenue dependence on BTS still exists. Looking at existing listed entertainment companies, there were revenue gaps due to military enlistment of key groups such as Big Bang and TVXQ, but after discharge, they maintained past monetization levels. Regarding this, Lee Ki-hoon, a researcher at Hana Financial Investment, explained, "Considering BTS's narrative and message, and the process of embedding them into music, I believe the peak of BTS's performance is not now," adding, "Big Hit's IPO upper limit is completely undervalued."