Big Hit Q3 OP up 73% on yr, institutional dumping suspended

2020.11.16 14:09:54 | 2020.11.16 15:48:00

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Big Hit Entertainment Co., label behind K-pop superstar BTS, delivered strong earnings for the third quarter, its first report card since going public last month, thanks to new feats by its main artist.

Big Hit Entertainment said in a regulatory filing that it raised 40.1 billion won ($36.2 million) in operating income on a consolidated basis in the July-September period, up 38 percent on quarter and 73 percent on year. Net profit jumped 51 percent on quarter and 92 percent on year to 27.2 billion won on sales of 190 billion won, up 22 percent on quarter and 54 percent on year.

Shares of Big Hit Entertainment closed Monday 7.19 percent higher at 171,500 won.

Big Hit Entertainment attributed strong earnings to solid sales of albums and steady increase in demand for its official MD products. Sales also were boosted by the acquisition of record label PLEDIS Entertainment last month.

In the first 9 months of the year, Big Hit Entertainment raised 89.9 billion won in operating profit, up 20 percent from the same period a year ago, on sales of 484 billion won, up 9 percent on year. Net profit surged 13 percent to 60.4 billion won during the same period.

The third-quarter earnings report – which is subject to external audit review – is the first since Big Hit Entertainment went public in October.

The initial public offering (IPO) of Big Hit Entertainment was the talk of the town as expectations were high for its shares to become another blockbuster after the debuts of SK Biopharmaceuticals and Kakao Games. Big Hit Entertainment shares began trade on the country’s main bourse Kospi on Oct. 15 at double its initial public offering price of 135,000 won. Its stocks, however, have been on a downward spiral, falling to as low as 142,000 won on Oct. 30 compared with a closing price of 258,000 won on the first day of trade.

Shares turned around after the earnings disclosure despite concerns that investors would dump shares after lockup period expires for institutional investors.

Of 7.13 million IPOs, 4,282,309 were allocated to institutional investors. Of them, 30 percent, or 1,323,416 were locked up for one month. The lockup was lifted on Monday, but institutions held their shares after the better-than-expected third quarter earnings.

On Oct. 30, when 205,463 shares allocated to institutional investors were lifted from a 15 day lockup period, Big Hit Entertainment shares closed at its lowest of 142,000 won.

Analysts noted that expectations are high that Big Hit Entertainment will report solid earnings for the fourth quarter when the comeback of BTS will be reflected. BTS will also release its new album BE on Friday.

By Lee Eun-joo

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