SM to Invest 1 Trillion Won in Establishing and Operating Production Centers in the US, Japan, and Southeast Asia

Securing Funds through Cash Holdings, Borrowing, and Asset Sales
"Targeting 2025 Sales of 1.8 Trillion KRW and Operating Profit of 500 Billion KRW"

[Asia Economy Reporter Seo Mideum] SM Entertainment will invest 1 trillion KRW in entering the global music market and building an integrated fan platform.

On the 23rd, SM announced the 'Global Expansion and Investment Strategy' containing this information through YouTube.

[Image source=Yonhap News]

According to the strategy, SM will focus investments in the short term on ▲internalizing publishing capabilities (350 billion KRW) ▲expanding labels into other genres and regions (300 billion KRW) ▲investing in and expanding fan platforms (200 billion KRW).

In the mid to long term, it plans to ▲expand global regions (50 billion KRW) ▲strengthen metaverse and content capabilities (100 billion KRW).

It also presented a blueprint to establish production centers in key overseas markets such as the US, Japan, and Southeast Asia to debut local groups. Starting with NCT Tokyo in the second half of this year, it plans to introduce local artists in Japan and the Americas in the second half of 2024.

The funds will be secured through existing cash holdings, asset sales, and borrowings. It plans to prepare 1 trillion KRW by combining 300 billion KRW from current cash and future operating cash flow (150 billion KRW each), 220 billion KRW raised from a strategic business partner (Kakao), 200 billion KRW in borrowings, and 280 billion KRW from non-core asset sales.

[Photo by SM Entertainment]

Through this investment, SM expects an additional 260 billion KRW in sales from seven domestic multi-production centers and three global production centers by 2025. The 2025 target is 1.8 trillion KRW in sales and 500 billion KRW in operating profit.

Co-CEO Lee Sung-soo emphasized, "The music publishing subsidiary, which will receive 350 billion KRW in investment, will continuously supply high-quality songs to SM's multi-production centers and labels based on composers and lyricists with diverse personalities," adding, "We will actively invest so that this publishing business functions as an engine to promote high growth in our core business."

Chief Financial Officer Jang Cheol-hyuk said, "We aim for SM's stock price to reach 360,000 KRW per share by 2025," and added, "Through SM 3.0, we will firmly establish ourselves as the undisputed number one company in the K-pop industry. We hope that this leap to SM 3.0 resolves various issues stemming from governance and doubts about mid- to long-term future strategies."