Shown above is the seven-piece boy band BTS. Big Hit Entertainment, the music label of K-pop star group, plans to go public next month. The initial public offering is expected to attract many investors. Photo courtesy of Big Hit Entertainment

Music label’s estimated value keeps rising

The popularity of South Korea’s boy band BTS prompts analysts to raise the estimated market capitalization of its management company Big Hit Entertainment ahead of its initial public offering (IPO).

Up until now, the value of the Seoul-based music label was estimated at around $4 billion at best. But now, some observers expect that the figure would approach $7 billion.

For example, Yuanta Securities projected that the value of Big Hit would be between $5.7 billion and $6.8 billion thanks to the recent boom in the IPO market.

Earlier this year, offerings of drug firm SK Biopharmaceuticals and game publisher Kakao Games attracted tens of billions of dollars from retail and institutional investors.

On a more positive note, BTS became the first Korean act to top Billboard’s main singles chart late last month to strengthen investors’ belief on Big Hit’s prospects.

Yuanta Securities Korea said that Big Hit’s proper value should be in the neighborhood of $6 billion in consideration of the price-earnings ratios of SK Biopharmaceuticals and Kakao Games.

The solid performances of Big Hit this year despite the COVID-19 outbreak also encourages observers to positively predict the upcoming IPO, which will get subscriptions of individual investors next month.

Big Hit reported $43 million in half-year profits as its online concert offset cancellations of offline events amid the virus pandemic.

Some worry that Big Hit is just about BTS. That’s a legitimate concern. But BTS is doing so well. It seems that investors would rush to the IPO market of Big Hit,” a Seoul analyst said.