DAISHIN SECURITIES analyzed on the 8th that SME's performance growth is continuing and that sales could increase by 30% next year upon the lifting of China's ban. They raised the target stock price from the previous 120,000 won to 150,000 won, a 25% upward adjustment, and maintained the investment opinion of 'buy.' The closing price of SME on the previous trading day was 127,500 won.
SME reported a 5.2% and 109.6% year-on-year increase in sales and operating profit, respectively, achieving 231.4 billion won and 32.6 billion won in the first quarter. Strong performance in concerts and merchandise sales continued, and one-time profit related to music sources for China influenced the performance growth. Additionally, non-operating profit reflected a fair value reassessment of DearU's equity, amounting to about 200 billion won.
Researcher Lim Soo-jin from DAISHIN SECURITIES noted, 'The excellent performance in the first quarter and the rapid growth of new artists are continuing,' and added, 'Hearts2Hearts has recorded the highest initial sales for a debut girl group, while NCT WISH shows the largest growth among new boy groups with initial sales of 1.09 million copies.'
Researcher Lim assessed that there is ample momentum for many activities scheduled in the second and third quarters based on a variety of intellectual property (IP) lineups. He stated, 'From the second quarter onward, the profit improvement effect is expected to accelerate with DearU's consolidation.'
He also mentioned that if China's ban is lifted, many IPs with a high proportion of Chinese fandom are expected to receive strong benefits. Researcher Lim said, 'In the case of SME, IPs with relatively low activity frequency have high demand in China, making tours in various Chinese cities possible,' and added, 'When the China tour is announced, annual sales growth is expected to be about 30%, maintaining expectations.'