Lee Min-hyung joined The Korea Times in 2014 and has worked as a journalist mainly in Korea’s finance, tech and automotive industry. He specializes in content creation, breaking news and in-depth analysis currently on transportation and mobility. You can reach him via mhlee@koreatimes.co.kr.
SM shares feared to have reached overvaluation point
Boy group Super Junior of SM Entertainment performs during the firm's online concert on Jan. 1. Yonhap
By Lee Min-hyung
By Lee Min-hyung
Shares of SM Entertainment are feared to have reached close to an overvaluation point, as escalating uncertainties over the management dispute look to offset the recently-bullish sentiment on the large-cap entertainment stock, analysts said Tuesday.
The stock price of SM set a historic high of 118,300 won per share on Monday after an investors' buying spree propelled by hopes on HYBE's possible acquisition of the company. This is an increase of more than 60 percent in less than a month. SM shares closed at 74,300 won as of Jan. 17.
But some market analysts share skeptical voices on SM's ability to extend the unexpectedly strong rally momentum, as the high-profile takeover still faces uncertainty due to the ongoing legal dispute between SM founder Lee Soo-man and the firm's management.
Local brokerages' consensus on SM's stock price reached around 112 thousand won. Only two securities firms ― eBest Investment & Securities and Kiwoom Securities ― set SM's target stock price at over 120 thousand won, a tender offer price presented by HYBE which plans to acquire 25 percent of SM's common shares.
Lee Nam-soo, an analyst at Kiwoom Securities, revised SM's target stock price from 105 thousand won to 127 thousand won on the firm's earnings growth spurred by stronger record and concert sales. But the expert downgraded the investment opinion from “buy” to “outperform” due to the short-term surge in the firm's stock value.
Other analysts also shared a similar outlook but argued that HYBE will benefit more from the acquisition of SM.
“If the acquisition is confirmed, HYBE's target stock value will rise by 19 percent from the status quo and reach around 250 thousand won,” Lee Ki-hoon, an analyst at Hana Securities, said.
SM's recent rally has enabled the company to regain its spot in the list of the top 10 most valuable stocks in the secondary Kosdaq for the first time in nine years since 2014. According to data from the Korea Exchange, SM's market cap closed at 2.76 trillion won as of Monday. This was the ninth-largest among Kosdaq-listed companies.
HYBE is the unmatched market leader with a market capitalization of more than 8.3 trillion won. SM also recently surpassed JYP in the runner-up race. JYP maintained its second-largest entertainment stock position since March 2022, but ended up yielding the spot to SM.