EUGENE INVESTMENT & SECURITIES said on the 18th that SAMG Entertainment posted weak third-quarter results this year as global peers' multiples (enterprise value relative to profitability) declined. It lowered its target price to 70,000 won from 90,000 won. However, it kept a Buy rating, saying a record quarterly performance is expected in the fourth quarter. SAMG's closing price the previous day was 49,500 won.
SAMG Entertainment disclosed on the 14th that, on a consolidation basis for the third quarter this year, it recorded revenue of 21.7 billion won and an operating loss of 700 million won. Revenue fell 13.1%, and the operating loss continued.
Lee Hyeon-ji of EUGENE INVESTMENT & SECURITIES said, "There were not many catalysts to drive top-line growth in the third quarter this year, resulting in weak results," and noted, "With the seasonal off-peak and the removal of last year's third-quarter boost from the film 'Love Hatchupping,' the top line shrank and the company again posted an operating loss."
Even so, the analyst expects a record-high quarterly performance in the fourth quarter. In addition to the seasonal peak, a new season of Teenieping will be released, and revenue recognition for Aespa-ping is expected to begin.
Specifically: ▲ opening an offline brand store within the year and concurrent improvement in profitability from sales of self-produced merchandise ▲ the scheduled release of the sequel to the film "Catch! Teenieping" ▲ preparation for a collaboration with SM's third artist.
The analyst said, "To raise the multiple, global market expansion is essential. With Teenieping season 5 slated to air in China, solid revenue is being maintained, while in Japan, season 3 began airing in July this year, building awareness," adding, "In Europe (Russia), the success of Metal Cardbot generated double-digit revenue."
The analyst added, "If most overseas revenue had been from China so far, next year global expansion centered on Japan is expected," and said, "Given the lowered expectations, we recommend buying on pullbacks."