Shinee and EXO are coming back...SM's earnings are expected to rebound this year

Shinhan Investment Corp. predicted on the 12th that sales of SM Entertainment decreased due to the novel coronavirus infection (Covid-19) last year, but that sales of albums increased steadily this year, and that online and offline sales would grow. Investment opinions were maintained at 37,000 won.

According to Shinhan Investment Corp., SM's sales and operating profit in the fourth quarter of last year fell 5.0 percent and 90.2 percent year-on-year to 184.2 billion won and 1.3 billion won, respectively. Its operating profit was lower than its market consensus of 6 billion won.

"Despite Covid, sales of music and music have grown. Offline sales such as advertisements, events, and performances have decreased as expected. "Overall, the profit ratio has been lowered."

"It seems that operating profit was low due to separate one-off costs in Korea, loss of overseas subsidiaries, and reduced profits of other subsidiaries," he explained.

Shinhan Financial Investment is predicting a rebound in SM's performance this year. This year's consolidated operating profit is expected to rise 395.8% year-on-year to 32.2 billion won, as expectations for improved performance will increase due to increased album sales.

"The concert and IP (intellectual property rights) activities of aespa, a meta-bus avatar of aespa, are expected to expand," he said. "It seems possible to grow sales related to broadcasting after SHINee and EXO members return from the army."

"If the Korona situation improves in the second half of the year, additional activities such as offline performances are also worth looking forward to," he added. "Improving the advertising economy can also contribute to improving the consolidated performance."

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