A preliminary general public offering from big hit entertainment valuing the team behind k-pop celebrities bts at very nearly $4bn has sparked criticism from analysts which state the price is too large given mounting dangers facing south koreas enjoyment industry.
The seoul-based songs agency, which formed the seven-member boy band a decade ago, wants to boost up to won963bn ($809m) by detailing 21 percent of business on the south korean stock exchange, relating to a regulating filing on wednesday.
The ipo is defined becoming southern koreas biggest in 36 months therefore the implied market capitalisation of $3.9bn, towards the top end associated with pricing range, would make big hit much more important compared to countrys three largest listed music agencies combined.
The listing comes against a background of unprecedented appeal in south korean pop music songs, mainly spearheaded because of the huge global group of followers of this worlds biggest boy musical organization, bts. the groups very first english language release, dynamite, last thirty days became the initial south korean song to top the usa billboard hot 100.
However, the ipo prices means that big hit will start trading at 76 times its projected earnings for 2020 around twice as much 30 to 40 selection of its main domestic rivals and 5 times compared to samsung electronics, south koreas biggest business plus the worlds biggest maker of computer chips and smartphones.
The price range appears costly in accordance with its profits and weighed against its rivals, said lee jin-man, an analyst at sk securities.
Huge hits revenue nearly doubled to $500m this past year, in the straight back of sellout international tours by bts as well as the boy rings rapidly expanding group of fans. the organization touted new earnings channels through appearing acts, and language understanding systems and gaming products.
But huge hits profits in the first half 2020 slipped 4 per cent to $42m due to the fact coronavirus pandemic forced bts to terminate tours, underscoring the companys hefty dependence on the band.
Sung mi-kyung, a specialist at korea creative content agency, said that even though the k-pop business was adapting to limitations on international travel and large general public events such as shows with a rise in online content, coronavirus had been putting the brake system on.
It is very important for music artists to communicate and unite along with their followers through concerts in order to increase their particular lover bases...they cant repeat this right now, which poses a threat the growth of the k-pop business, she said.
One investment supervisor at an united states hedge investment noted that the songs business had been now seen as a vital development driver for the south korean equity market, the 5th biggest by capitalisation in asia. but he queried the costs mounted on these types of shares.
As an example, [big hits] reliance on bts is too large while singers deviant private behaviours pose investment risks when you look at the sector, stated the buyer, talking about scandals in 2019 that resulted in two various other k-pop celebrities being jailed for rape and a short-term hit to stock rates throughout the business.
Mandatory conscription to the south korean military also looms as a challenge for bts though big hit noted in its regulatory filing the 18-month nationwide service of the oldest member, jin, might be delayed before end of 2021.
Still, the listing is expected to produce a windfall to big hits founder and biggest shareholder bang si-hyuk while the seven bts people also called the bangtan boys. mr bang, whom has 43 per cent of team, has given each one of the movie stars 68,385 shares, worth won9.2bn at the top of the ipo budget of won105,000 to won135,000.
Mr lee of sk securities stated the expensive ipo price also highlighted a broader shift under method in south korean stock areas from standard equipment manufacturers creating computer system chips, boats and cars to content creators such entertainment organizations and games makers.
Additional reporting by kang buseong and edward white