SM Invests 1 Trillion Won... Creating a Second SM for the Global Market

Establishment of Global Production Centers in the US, Japan, and Asia
Target Stock Price of 360,000 KRW Set for 2025

[Asia Economy Reporter Yuri Choi] SM Entertainment (SM) will invest 1 trillion KRW in acquiring overseas management companies and more. The company plans to establish global production centers locally in the U.S. and other countries to become the second SM.

On the 23rd, SM announced the 'SM 3.0: Global Expansion and Investment Strategy' through its official YouTube channel.

Japan, the U.S., and Southeast Asia were identified as key global market bases. Global production centers for casting, training, and A&R (Artist & Repertoire) will be established in each local area. Essentially, SM’s entire production center will be relocated overseas.

Lee Sung-soo, co-CEO of SM, explained, "Global production centers will play a crucial role in SM’s overseas expansion," adding, "We will collaborate organically with domestic operations to maximize the musical characteristics and diversity of talent pools by country."

A 1 trillion KRW scale investment will support global expansion. To fund this, SM will utilize existing cash and future operating cash flows, attract investments from strategic business partners, sell non-core assets, and secure some borrowings.

The investment will be mainly allocated to ▲establishing a music publishing subsidiary (350 billion KRW) ▲investing in domestic and overseas agencies (300 billion KRW) ▲launching an integrated fan platform (200 billion KRW). For mid- to long-term growth, investments will also be made in ▲building global production centers and launching new IPs (50 billion KRW) ▲strengthening metaverse and content capabilities (100 billion KRW).

Through global expansion and investment, SM aims to achieve consolidated sales of 1.5 trillion KRW and operating profit of 500 billion KRW by 2025. This target includes 260 billion KRW in revenue generated through overseas production centers. The target stock price for 2025 is set at 360,000 KRW per share. Additionally, SM announced that at least 50% of executive compensation will be linked to stock price and shareholder returns to ensure responsible management.

Jang Cheol-hyuk, SM’s Chief Financial Officer (CFO), emphasized, "SM has been undervalued in the market compared to competitors due to governance issues in the past," and added, "Through the leap to SM 3.0, we will firmly establish ourselves as the number one company in the K-pop industry."