SM Surpasses JYP... Returns to KOSDAQ Top 10 Market Cap After 9 Years

[Asia Economy Reporter Kwon Jae-hee] SM Entertainment (SM Entertainment) has entered the top 10 in KOSDAQ market capitalization for the first time in 9 years since 2014. This is interpreted as a result of a significant rise in stock price amid a heated acquisition battle surrounding SM recently.

According to the Korea Exchange on the 14th, as of the closing price on the 13th, SM's stock price was 116,000 won, and its market capitalization was 2.7616 trillion won, ranking 9th in the KOSDAQ market following the 10th.

SM's return to the top 10 in KOSDAQ market capitalization is the first time in about 9 years since June 11, 2014.

Since its listing on the KOSDAQ market in 2000, SM once rose to 5th place, becoming one of the top market capitalization stocks, but later was pushed out of the top 10 by gaming and pharmaceutical stocks and traded outside the top 10 since 2014.

With SM rising to 9th place in the KOSDAQ market, it also succeeded in reversing the ranking with fellow entertainment stock JYP Ent. As of the 13th, JYP Ent.'s stock price was 72,800 won, and its market capitalization was 2.5842 trillion won, ranking 11th in the KOSDAQ market. JYP Ent. had ranked 10th in the KOSDAQ market until the 9th.

Among entertainment stocks, HYBE, which was listed in 2020, has been competing with SM and JYP Ent. for the 2nd place ranking after HYBE. Since March last year, JYP Ent. has consistently held the 2nd place among entertainment stocks.

SM's stock price rose 18.60% on September 16 last year after activist fund Align Partners Asset Management criticized shareholder value destruction and SM announced it would consider terminating its contract with Like Planning. Subsequently, with the end of Lee Soo-man's exclusive producing system and the realization of Align's demands, the stock price rose further.

Recently, SM's stock price surged 31.82% this month alone following news of Kakao becoming SM's second-largest shareholder and rumors of HYBE's acquisition bid.

As of the 13th, the combined market capitalization of SM and HYBE (7.8158 trillion won) exceeds 10 trillion won.

However, the consensus in the securities industry is that since SM's stock price has surged sharply in a short period, the potential for further increase is not high.

The securities industry's consensus target price for SM is 112,441 won, which is lower than the closing price on the 13th. Among 17 securities firms that presented target prices for SM, only two firms, Ebest Investment & Securities (130,000 won) and Kiwoom Securities (127,000 won), set target prices higher than HYBE's tender offer price of 120,000 won.

However, depending on the outcome of the provisional injunction filed by major shareholder Lee Soo-man against SM to prohibit the issuance of new shares and convertible bonds, and Kakao's willingness to purchase additional shares accordingly, there is a possibility of a short-term additional rise in the stock price.

Lee Sun-hwa, a researcher at KB Securities, said, "If the provisional injunction is dismissed, Kakao may have to buy SM shares at a price higher than HYBE's tender offer price of 120,000 won. If the injunction is granted, Kakao is likely to look for other sellers, and SM's stock price may form a short-term peak at 120,000 won."