[THE INVESTOR] SM C&C will grow fast on the back of synergy between entertainment and advertising sectors, said Meritz Securities on Sept. 27, suggesting a “buy” recommendation and 4,000 won (US$3.51) target price.
SK Telecom has become the second-largest stakeholder by participating in a capital raise in July, and has taken over SK planet’s advertising division for 66 billion won. The next year more than two-thirds of its revenue will come from advertising and the rest from content production and management, said analyst Koo Seong-jin.
Having become the telecoms giant’s affiliate will boost the SM Entertainment affiliate’s advertising sector by 185 billion won from affiliates alone, and operating profit of the sector will surge to 14.2 billion won from 8.8 billion won, estimated the analyst.
There still is significantly large room to grow and it has secured a business structure that could bolster a higher operating margin than rivals, noted Koo.
By Hwang You-mee (glamazon@heraldcorp.com)