[Click eStock] "BigHit, Expecting Export of Artist Development System and Growth of Weverse"

NH Investment & Securities Report
Q4 Operating Profit 45.4 Billion KRW... 92% Increase YoY

[Asia Economy Reporter Minji Lee] NH Investment & Securities maintained a buy rating and a target price of 270,000 KRW for Big Hit on the 11th. This is based on the expectation of stock price appreciation considering the export of the artist development system and the growth potential of Weverse.

In the fourth quarter, the company is expected to record sales of 311.4 billion KRW and operating profit of 45.4 billion KRW, representing increases of 116% and 92% respectively compared to the same period last year. This is presumed to reflect strong sales of albums and online concert-related revenue. Despite the unit price of BTS's new album being set at twice that of the previous release, sales volume only decreased by 21%. For the October online concert, ticket prices were 1.7 times higher than the previous online concert, yet the number of simultaneous viewers increased by about 30%.

Researcher Hwajeong Lee of NH Investment & Securities explained, “From a cost perspective, temporary declines in operating profit margin are inevitable due to one-time listing-related expenses and some upfront costs related to the world tour,” adding, “Since this is not a structural cost increase issue, there is no concern about fundamental damage.”

This year, Big Hit will launch a global debut project utilizing its artist planning capabilities. The approach involves training local trainees through the company’s system and debuting them with localized content. The first case is a boy group debuting in Japan in the second half of the year, composed of five members from the audition program Island and newly selected local trainees.

Researcher Lee said, “It is a form of exporting a development system similar to JYP Entertainment’s NiziU,” and added, “Considering the company’s differentiated global planning capabilities proven by BTS and the member composition with already secured global recognition, the project has a high possibility of success.”

The growth potential of Weverse is also anticipated. The proprietary platform Weverse has completed contracts with four overseas artists under UMG (including New Hope Club). Although the individual recognition of these artists is not high, the relationship between the mega global record company UMG and Weverse has begun, making the possibility of major global artists joining the platform valid in the future. The researcher stated, “Unlike competing platforms focused on K-pop, Weverse will differentiate itself as a platform encompassing the global music market.”