November 25, 2024

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[THE INVESTOR] Expectations are high for a possible initial public offering of Big Hit Entertainment, the managing agency of the K-pop sensation BTS, largely buoyed by its upbeat earnings report last week.

On March 22, the firm publicized its earnings for the first time since its establishment in 2005.

The figures showed that in 2017, Big Hit's operating profit more than doubled to 32.5 billion won (US$30 million) from a year ago. This eclipsed those of its bigger rivals SM Entertainment, which posted 10.9 billion won during the same period, and YG with 19.5 billion won. 

Big Hit's revenue soared 162 percent to 92.4 billion won.

 

K-pop boy band BTS

The burgeoning earnings came amid growing speculations about the firm’s imminent IPO possibly on the nation’s secondary bourse KOSDAQ. In December, CEO and founder Bang Si-hyuk also said the firm has started discussing its stock listing with shareholders.

Shares of the nation’s big three entertainment firms have soared recently as the K-pop industry overall has grown into US$5 billion won market. Their price-per-earnings ratio has surged almost 40 times on average.

Industry watchers say Big Hit’s market value is expected to reach up to 700 billion won, posing a direct threat to the top three firms that have maintained their leadership for almost a decade. Currently, the largest SM is valued at 1 trillion won, while JYP and YG stand at 710 billion won and 540billion won, respectively.

Now Bang, the largest shareholder, owns 50.88 percent, while other financial investors hold a combined 40 percent. Sources say the investors could seek to sell some shares during the IPO process.

By Lee Ji-yoon (jylee@heraldcorp.com)