September 22, 2021


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For stock performances of Big Hit Entertainment, BTS is the ticket

4 min read

Despite disruptions in the music industry caused by the coronavirus epidemic, B-Hit Entertainment, the company behind K-pop superstar BTS, exploded in 2020. Last year, BTS entered the US music market last year and topped the Billboard music hot. 100, huge YouTube tile, Grammy nominations and quick album sales.

In the case of a single hit, the explosion of “dynamite” combined with BHE’s profitable initial public offering (IPO) in mid-October 2020 to KKR 4.8 trillion (36 4.36 billion at an exchange rate of January 2021). Sales have enabled it to raise fresh capital of 875 million (KRW963 billion).

Funds and institutional investors have subscribed 1,100 times more than the amount of stock available to professionals. Although Korea-based retail investors applied times00 times more than their allotted share.

Luckily enough to get on board before or before the stock launch, these potters were able to share BHE’s fortunes and enjoy spectacular early profits.

However, the secondary market for BHE shares has been more than a roller coaster.

Initiated by the actions of frustrated firms, and BTS fans who use the stock as a commodity at almost any price, the stock has risen further in early trading. On the first day they almost doubled to KRW 258,000.

The next day soon the cool reality set, when the price dropped to KRW 1999,000, which was about 23% lower than at their one-day high. Shares did not reach that height and by the end of October, beyond the IPO price limit – KRW was back all the way to 144,000.

Since then, the stock has regained some of its lost ground – it rose 11% on Friday (January 21, 2021) to close at KRW 192,500.

At this price, BHE’s founder, Bang C-Hyuk, who was personally a 3% stakeholder in the company, is still a millionaire. And members of the BTS band saw each of their individual share allotments worth 12 12 million (KRW 13.2 billion).

Still, questions have been raised: for example, how will unexpected retail investors – who similarly entered other Korean hot stocks in 2020, Kakao Games and SK Biopharmaceuticals – be hired if BHE does not create the incentive?

“The bankers did their job, but the IPO was probably carried out in large numbers,” said one securities analyst. Different. “Institutional investors have taken available profits and each lockup has expired.”

At the time of the inauguration, BHE’s multiple value of revenue was 70 times higher than the 2020 net income, much higher than that of the Korean economy’s core electronics, technology and heavy industry companies.

For the three months from September (announced in November) BHE-year revenue showed 54%. However, net profit for the first nine months showed a shrinking effect of the coronavirus, rising only 13% to ৫ 55 million (KRW. 40.4 billion).

The company will soon have a chance to prove its worth when it releases its 2020 annual figures.

Externally, BHE’s 2020 seems to have lasted for lucky years. It has renegotiated its BTS management agreement just before the IPO. And just a few days before Jean, a veteran band member of BTS, the draft was made to save. (Korean law was changed to require K-pop stars to be exempted from otherwise compulsory military service.)

Fourth quarter earnings can be impressive. The post-IPO period includes BTS’s “Soul of Map of the Soul on: E” online concert, which is estimated to have grossed about মিল 35 million from nearly ten million ticket sales and from the band’s “B Deluxe Edition” album.

However, many pundits have asked whether it is understandable to pay higher rates for BHE than Korea’s three top talent companies, JY Entertainment, YG Entertainment and SM Entertainment. K-Pop

Compared to the other trio that has a larger portfolio of artists, BHE looks like a one-product company. After all, more than 90% of its 2019 revenue came from BTS – in addition to recorded music and merchandise, the group is one of the top-selling travel tours in the world.

With the success of other bands, such as Together X Call, and the mid-acquisition of Plaidis Entertainment, BHE’s diversified endeavors will begin to show its success after Q1, but the company is still unlikely to reduce its BTS reliance. In fact, as BHE’s shares have declined, shares of other companies have moved upwards, clearing some price errors, especially as YG stocks have gained ground, rising 20% ​​since BHE’s trading debut, and JYY has risen 10% and SM 5%. .

But there is no doubt about BHE’s vaulting ambitions. The company plans to move from its current headquarters in Seoul’s fashionable Gangnam District (world-famous by YG-promoted PSY) and the recently completed Ewansan Trade Center. To cope with the growing number of workers, BHE leased the entire building, which is said to have 26 floors and seven basement levels.

And, of course, will return to the BTS stage after the return of live music.

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