An initial community supplying from big hit entertainment valuing the group behind k-pop celebrities bts at very nearly $4bn has sparked critique from experts whom state the cost is simply too high provided mounting risks dealing with south koreas enjoyment industry.
The seoul-based songs company, which formed the seven-member boy band a decade ago, would like to boost to won963bn ($809m) by detailing 21 % of the company regarding the south korean stock market, in accordance with a regulating filing on wednesday.
The ipo is scheduled becoming south koreas biggest in 3 years and implied market capitalisation of $3.9bn, at the very top end of rates range, will make big hit much more important than the countrys three largest listed songs companies combined.
The listing comes against a background of unprecedented appeal in south korean pop music songs, largely spearheaded by the huge global fan base of the worlds biggest son band, bts. the groups first english language launch, dynamite, last month became the very first south korean song to top the us billboard hot 100.
But the ipo rates implies that big hit will begin trading at 76 times its projected profits for 2020 approximately twice as much 30 to 40 selection of its primary domestic competitors and 5 times compared to samsung electronics, south koreas biggest organization in addition to worlds biggest manufacturer of computer system chips and smartphones.
The price range looks costly relative to its earnings and compared with its rivals, stated lee jin-man, an analyst at sk securities.
Big hits income almost doubled to $500m a year ago, on back of sellout worldwide trips by bts additionally the guy rings rapidly broadening group of followers. the company touted new income channels through promising acts, and language learning platforms and video gaming items.
But big hits profits in the first 1 / 2 of 2020 slipped 4 percent to $42m given that coronavirus pandemic pushed bts to cancel tours, underscoring the companys hefty reliance on the band.
Sung mi-kyung, a researcher at korea creative content department, said that as the k-pop industry was adapting to limitations on international travel and enormous public events particularly concerts with a surge in internet based content, coronavirus ended up being placing the brake system on.
It is very important for performers to communicate and unite with regards to fans through shows to expand their particular fan basics...they cannot repeat this at this time, which presents a danger when it comes to growth of the k-pop business, she said.
One investment supervisor at an united states hedge investment noted that the music business was now viewed as a vital growth driver for south korean equity market, the fifth biggest by capitalisation in asia. but he queried the values attached to such stocks.
Like, [big hits] dependence on bts is too high while vocalists deviant private behaviours pose financial investment risks inside sector, said the investor, discussing scandals in 2019 that led to two various other k-pop celebrities being jailed for rape and a temporary hit to stock costs throughout the business.
Mandatory conscription towards the south korean military in addition looms as a problem for bts though big hit noted in its regulatory filing the 18-month national service of the earliest user, jin, could be postponed until the end of 2021.
Still, the listing is anticipated to supply a windfall to big hits creator and biggest shareholder bang si-hyuk plus the seven bts people also known as the bangtan boys. mr bang, just who has 43 % for the team, has given each of the performers 68,385 shares, well worth won9.2bn at the top of the ipo budget range of won105,000 to won135,000.
Mr lee of sk securities said the pricey ipo cost also highlighted a broader move under means in south korean stock areas from standard hardware producers making computer system chips, boats and cars to content designers like enjoyment companies and games manufacturers.
Additional reporting by kang buseong and edward white