Big Hit Rises on the Back of Strong Performance

[Asia Economy Reporter Song Hwajeong] Big Hit, which had been sluggish since its listing, is making a comeback based on strong third-quarter performance.

As of 9:11 AM on the 18th, Big Hit was trading at 182,500 KRW, up 1.67% (3,000 KRW) from the previous day. It has maintained a strong upward trend for four consecutive days, recovering the 180,000 KRW level. On the 16th, it surged more than 7%, and from the beginning of this month until the previous day, it rose by 26.14%.

Continuous inflow of institutional buying is driving the stock price increase. Institutions purchased 27.881 billion KRW worth of Big Hit shares just on the previous day, marking the second-largest net buying. For the entire month, institutions have bought 72.379 billion KRW worth, recording net purchases on all but two days this month.

Along with institutional buying, strong third-quarter earnings also supported the stock price rise. Big Hit recorded 190 billion KRW in sales, a 54% increase compared to the same period last year, and operating profit rose 73% to 40.1 billion KRW in the third quarter. Park Seongho, a researcher at Yuanta Securities, said, "The operating profit exceeded consensus by about 25%. The third-quarter results can be summarized as a quarter that confirmed Big Hit's fundamental profit strength despite the absence of new artist releases and online concerts."

Record-high performance is expected in the fourth quarter. Researcher Park explained, "Big Hit's fourth-quarter operating profit is expected to reach 66.7 billion KRW, a 66% increase from the previous quarter, marking the highest performance ever. The expected album sales for Big Hit labels in the fourth quarter exceed 5 million copies, with combined sales of two BTS albums expected to be around 3.5 million copies."

Although concerns about supply and demand, which have dragged down Big Hit's stock price since its listing, still remain, there is an opinion that these should be actively used as buying opportunities. Ji Inhae, a researcher at Hanwha Investment & Securities, said, "Although there are supply and demand concerns as the one-month lock-up period recently ended, considering that the current market capitalization is positioned at the very bottom at 5.7 trillion KRW, the surprise third-quarter earnings, and the re-emergence of the most essential artist momentum in the entertainment sector, it is necessary to actively use this as a buying opportunity."