[Special Stock] KeyEast Attracts Funds Amid SM M&A... Growth Expected Through Media and Platform Synergy

[Asia Economy Reporter Park Hyungsoo] KeyEast is showing strong performance. It appears that the news of increasing companies aiming to acquire SM Entertainment in the M&A market is influencing the stock price.

As of 9:56 AM on the 4th, KeyEast is trading at 16,300 KRW, up 7.59% from the previous day.

Following SM C&C's rise to the daily price limit the previous day, it is also surging more than 15% today. The largest shareholder of both KeyEast and SM C&C is SM Studios. SM Studios holds 24.43% of KeyEast shares and 29.88% of SM C&C shares.

According to the IB industry, Kakao Entertainment, CJ, and HYBE are reportedly participating in the bidding for SM shares. To acquire the 18.73% stake held by Chief Producer Lee Soo-man, leading domestic companies are offering unprecedented acquisition amounts. The acquisition price is rumored to be between 2.5 trillion and 4 trillion KRW. The reason for the intense effort to acquire SM, whose market capitalization is around 1.5 trillion KRW, is the increased value of fan community platforms. Analysts suggest that a rival to HYBE's dominant fan community platform 'Weverse' could emerge.

If CJ ENM, which can leverage media, or Kakao, which has an advantage in platforms, acquires SM, interest in KeyEast, which has transformed into a content production company this year, is expected to grow. By producing multiple works with high overseas pre-purchase requests in the second half of this year, expansion in scale and profit growth can also be anticipated. KeyEast is producing 'Amazing Gugeoni' and 'Ask the Stars' in the second half of this year. Global OTT scheduling of 'Illumination' is also expected. Earlier, at the time of the report publication in March, Ebest Investment & Securities forecasted that KeyEast would achieve sales of 77.8 billion KRW and operating profit of 18.3 billion KRW this year, representing increases of 62% and 997%, respectively, compared to last year.