[Naver] Bighit is moving forward with their plans to go public

[satoori]

May 26, 2020: "According to financial industry sources on the 26th, Bighit are moving forward with a listing on the KOSPI and have applied for a preliminary consultation with the Korea Exchange on the 21st. According to regulations, applicants for a stock market listing must consult with the Korea Exchange (KE) about the procedures and timing of the listing before applying for a preliminary screening. A KE official explained, "Pre-consultation usually takes a week. If there’s nothing unusual as a result, the applicant immediately requests a preliminary review of the listing." Therefore, it is expected that the pre-consultation will be finished as early as the 28th and the Bighit’s application for preliminary screening of their listing will be possible within this week.

Bighit was founded in 2005; they chose NH Investment & Securities, Korea Investment & Securities Co. & JP Morgan as its underwriters in late February and started preparations. Stock market industry sources predict that Bighit's corporate value will exceed at least ₩2T after its listing. If the price-earning ratio (PER) of 30x is applied to Bighit's net profit last year (₩72.4B), its market capitalization will reach ₩2.172T. Industry sources say considering BTS’ impact on the global entertainment industry, the PER given to Bighit will be at least 30x and up to 40-50x."

Context: Bighit is applying to get listed on the KOSPI, the bigger stock market, which is unusual because most entertainment agencies are listed on KOSDAQ. If Bighit is given 30x PER, market capitalization: 
Bighit: ~₩3T
JYP: ₩702B
SM:  ₩589B
YG: ₩510B

trans credit: modooborahae
original source: naver

 

Why not KOSDAQ? KOSPI is the international market for shares, which means people outside of Korea can invest in Bighit. KOSDAQ is limited to only Korea and only Koreans can buy shares and invest. Bighit is known internationally and big (trillions) enough to go on KOSPI where Samsung and Hyundai also sells shares.

Edited May 26, 2020 by satoori
So Bighit could be bigger then the current Big 3?...

[Jaejoong01]

Don't know how to feel about this cause I still think Bighit is better off with the ways they've been managing things till now. But then again, as long as it doesn't affect BTS in any way, I don't care what they decide to do. 

[satoori]

Note: BTS are models/partners for Samsung and Hyundai. Both have praised them for their huge economic value to their brands.

[coval]

what are the benefits of going public?

[satoori]

3 minutes ago, Jaejoong01 said:

Don't know how to feel about this cause I still think Bighit is better off with the ways they've been managing things till now. But then again, as long as it doesn't affect BTS in any way, I don't care what they decide to do. 

the bigger the risk the bigger the award. i don't know if staying a small company would of benefit them in the long-run. bighit have more groups under their belt now and have big plans for other projects. the extra money will be good.

i agree, it's kind of scary seeing how big they've gotten. so much could happen. but as long as bts is good, then i'm fine too

 

 

[satoori]

14 minutes ago, coval said:

what are the benefits of going public?

basically way more money

bighit will not have to rely mainly on the artists under their company to raise money, since now they will have even more investors

also - they will have more power in the industry and listed on the stock exchange

edit: someone smarter can more into the details tho..

 

Edited May 26, 2020 by satoori

[Nero_Kpop]

20 minutes ago, coval said:

what are the benefits of going public?

People will tell you it is to help the company grow and find partners to invest more in the future, the truth is Bang is just cashing in, he can get 50% of the company value in assets without losing anything (except to share the revenues)

Edited May 26, 2020 by Nero_Kpop

[satoori]

[yohapnews] Amid growing IPO rumblings, Big Hit shifts away from heavy reliance on BTS

SEOUL, May 26 (Yonhap) -- K-pop mega group BTS are undoubtedly a huge financial blessing for their record label-management agency Big Hit Entertainment. Thanks to the septet's smash hit album "Map Of The Soul: Persona" and sellout concerts worldwide, Big Hit posted record sales of 587.2 billion won (US$472.2 million) in fiscal year 2019, with net earnings soaring to 72.4 billion won.

At the same time, it could be argued that Big Hit's heavy reliance on BTS poses a risk for the company as well. It presents a fundamental and structural hurdle that the company must address to grow bigger and remain strong going forward -- to prove that its achievement isn't just tied to the success of a single artist or a franchise.

Clearly aware of this situation, the company, founded by producer Bang Si-hyuk, nicknamed Hitman, in 2005, has been on course to methodically reduce such risk by acquiring smaller-but-strong talent agencies, investing in and developing new projects, and expanding into non-music businesses.

The latest in Big Hit's portfolio diversification is the acquisition of Pledis Entertainment, a midsized talent agency that manages popular boy bands NU'EST and Seventeen. Pledis, established in 2007 by Han Sung-soo, who worked as a manager of singer BoA of SM Entertainment, is a seasoned entertainment company, responsible for popular artists, such as After School and Son Dam-bi.

Spoiler

The deal announced Monday has been an open secret within the industry for some time, with several media reports having been made since January. Big Hit had rebuked the reports with typical "nothing to confirm" statements.

The reports and the eventual confirmation Monday have fueled prospects that Big Hit could go public in 2020, by holding an initial public offering (IPO) later this year. It's been reported that the company has chosen several brokerages, including NH Investment Securities, Korea Investment Securities and JP Morgan, to handle its IPO.

According to securities industry insiders, Big Hit filed a request with the Korea Exchange (KRX), South Korea's securities exchange operator, last Thursday to start advance consultations about terms and requirements for listing on the benchmark KOSPI index.

The process usually takes about a week, and Big Hit may submit a preliminary examination application for listing this week at the earliest.

Big Hit's current valuation among brokerages is estimated from 2 to 4 trillion won.

"Big Hit's reliance of over 90 percent (in income) on BTS could drop immediately down to 75 percent from the acquisition of Pledis," Kim Hyun-yong, an analyst at eBEST Investment & Securities, said in a recent outlook report on the K-pop agency.

Kim projected that operating profit figures for Big Hit following the Pledis acquisition could increase to as high as 120 billion won annually. Operating profit for Big Hit stood at 98.7 billion won last year.

The Pledis deal marks Big Hit's second corporate acquisition, preceded by the buyout of Source Music, home to popular girl band GFriend in July of last year.

Through collaboration with Source Music, Bit Hit, currently without a girl group in its in-house lineup, plans to launch an all-female act in 2021 through a global audition project.

Internally, Big Hit has developed and debuted Tomorrow X Together, a five-member boy band, last year in hopes of creating the next global K-pop sensation. So far, the group has proved to create a strong buzz, collecting 10 rookie-of-the-year awards during last year's music awards season and making their American television debut last week following the release of their new EP, "The Dream Chapter: Eternity."

Big Hit has been making substantial commitments in non-music businesses as well.

In March of last year, the company established a 7 billion-won joint venture, Belift Lab, with South Korean entertainment giant CJ ENM to nurture new idol groups. Belift Lab's first project will be a K-pop audition TV show, named "I-Land," scheduled to be aired on Mnet next month.

BTS has also ventured into the realm of gaming. Last year, Netmarble Games, a South Korean mobile game developer and publisher, released "BTS World," a simulation game built around the idea of developing BTS members into global superstars for mobile devices.

Big Hit is apparently gearing up to develop its own games, acquiring game studio Superb last year, which has developed music games since 2016.

The company's long-term goal in spreading out the business portfolio is crucial as BTS members are eventually bound to enter hiatuses to fulfill their two-year military duties, posing a risk in terms of Big Hit's corporate stability.

All able-bodied South Korean young men are required to serve in the military, as the Korean Peninsula still remains technically at war since the 1950-53 Korean War ended in a ceasefire, not a peace treaty.

In terms of more broader corporate goals, Big Hit announced in February that it is working to establish an industrywide business standard that epitomizes and encapsulates the success the company has seen though BTS and apply it in other projects.

This idea is comparable to Culture Technology, a concept created by SM Entertainment founder Lee Soo-man, which lays down detailed steps for popularizing K-pop in the global market. Lee has been pitching CT as an entertainment industry standard that can be used in different regions of the world to create new versions of "hallyu," a term referring to the popularity of Korean culture.

"It appears Big Hit is becoming more serious in terms of its business, trying to make a big, bold statement," said Lim Jin-mo, music industry critic. "Big Hit's embrace of bands, such as NU'EST and Seventeen, signals serious business."

Lim also pointed out risks that follow rapid business expansions, such as potential liquidity crunches, and a decrease in support and resources toward the artists.

"There's always the possibility that the expansions could backfire," Lim said. "Almost all agencies tend to have one strong act accompanied by smaller ones. Allocating resources to various teams could potentially end up diluting corporate energy toward artists."

source: https://en.yna.co.kr/view/AEN20200526007351315

 

 

[Jollux]

55 minutes ago, Nero_Kpop said:

People will tell you it is to help the company grow and find partners to invest more in the future, the truth is Bang is just cashing in, he can get 50% of the company value in assets without losing anything (except to share the revenues)

Hit bang is too greedy, he didn't even want to pay the bts boys properly even after their mega success, but at the same time he goes around telling how great he and his company are, what bunch of bullshit.

[bb8__]

1 hour ago, coval said:

what are the benefits of going public?

usually it's just more money if people decided to buy in, but what does BH have to offer besides BTS...internationally speaking? Plus, they're getting up in age, which means military service...no other group has garnered as much success, including TXT.

[satoori]

15 minutes ago, bb8__ said:

usually it's just more money if people decided to buy in, but what does BH have to offer besides BTS...internationally speaking? Plus, they're getting up in age, which means military service...no other group has garnered as much success, including TXT.

Well Ohers, apparently they have a lot according to economist and investors. If Bighit future was so risky, they wouldn't have been the big talk of the industry for a few years now. There wouldn't be so many people ready to invest. The predictions being foretasted about their future market worth wouldn't be discussed so positively. It's obvious military isn't a huge concern for investors. Not for BTS either who signed for anothr 7 years. Some of y'all make it sound like enlisting is the end-all. When that don't seem to be the case. Also many reports I've read seem to think TXT is doing great and onboard to do even better in the future. Plus with BH acquisitions and other projects many seem to believe Bighit have a lot to offer.

OT: The BTS member age range from 92-97. We don't know how they will enlist tbh

Edited May 26, 2020 by satoori

[satoori]

23 minutes ago, Jollux said:

Hit bang is too greedy, he didn't even want to pay the bts boys properly even after their mega success, but at the same time he goes around telling how great he and his company are, what bunch of bullshit.

Lol I can't tell if you're being sarcastic or not?...

[satoori]

If they negotiated their new contract terms smartly...after this IPO BTS will be a lot more richer and set for life...

 

Edited May 26, 2020 by satoori

[bb8__]

4 minutes ago, satoori said:

Well Ohers, apparently they have a lot according to economist and investors. If Bighit future was so risky, they wouldn't have been the big talk of the industry for a few years now. There wouldn't be so many people ready to invest. The predictions being foretasted about their future market worth wouldn't be discussed so positively. It's obvious military isn't a huge concern for investors. Not for BTS either who signed for anothr 7 years. Some of y'all make it sound like enlisting is the end-all. When that don't seem to be the case. Also many reports I've read seem to think TXT is doing great and onboard to do even better in the future. Plus with BH acquisitions and other projects many seem to believe Bighit have a lot to offer.

OT: The BTS member age range from 92-97. We don't know how they will enlist tbh

I asked what else does BH have to offer that has had as great success as BTS internationally speaking....i can see Koreans investing by why would others outside of korea bother, i guess they do have merchandise they can sell. As for the military thing, that's two years gone...it doesn't mean that they'll obviously stop being bts but during that time other groups will emerge, will they continue to have the same star power that they have now? These are all questions that I'm sure investors will ask themselves, I'm merely stating the obvious.

[Gentle_fox]

1 minute ago, bb8__ said:

I asked what else does BH have to offer that has had as great success as BTS internationally speaking....i can see Koreans investing by why would others outside of korea bother, i guess they do have merchandise they can sell. As for the military thing, that's two years gone...it doesn't mean that they'll obviously stop being bts but during that time other groups will emerge, will they continue to have the same star power that they have now? These are all questions that I'm sure investors will ask themselves, I'm merely stating the obvious.

Don't bother with that person, they don't have a modicum of objectivity when it comes to BTS.

[hynapia]

30 minutes ago, bb8__ said:

usually it's just more money if people decided to buy in, but what does BH have to offer besides BTS...internationally speaking? Plus, they're getting up in age, which means military service...no other group has garnered as much success, including TXT.

The first member enlisting will be Jin and he's a very late 92 liner, meaning he can enlist even in mid-2021. The next would be Yoongi (early 93 liner) and he can wait until mid/late 2021 if he wants too. For example EXO's Suho is already 29 (91 liner) and he's just enlisted recently, so Jin and Yoongi could still wait untl they're nearly 29, so that means nearly 2 years with BTS as 7 members. And even with a few members enlisted, they can still make profit with solos/subunits.

Also TxT might isn't in BTS level but for a rookie group they're doing great. They've already sold 500k overall (probably 700-800k when this comeback's sales are counted on Gaon), they chart decently for a rookie, their fanbase is growing. If many companies can do well with groups that have 0 digital power and barely sell 100-150k, BH will still be more than fine even if they only had to depend on TxT.

Edited May 26, 2020 by hynapia

[bb8__]

4 minutes ago, Gentle_fox said:

Don't bother with that person, they don't have a modicum of objectivity when it comes to BTS.

Noted.  Was just offering my perspective that's all.

[satoori]

21 minutes ago, bb8__ said:

I asked what else does BH have to offer that has had as great success as BTS internationally speaking....i can see Koreans investing by why would others outside of korea bother, i guess they do have merchandise they can sell. As for the military thing, that's two years gone...it doesn't mean that they'll obviously stop being bts but during that time other groups will emerge, will they continue to have the same star power that they have now? These are all questions that I'm sure investors will ask themselves, I'm merely stating the obvious.

If others were not interested do you truly believe Bighit and their financial advisors would have gone the route they're going. They could of just stuck with KOSDAQ like the others. 

1. Investors still seem to believe BTS are worth investing in even if their power decrease a bit. However signs are not showing drastic decreases. There was news aired not to long ago in Korea about BTS economical impact in Korea and with all the brands they are with like Samsung and Hyundai, etc. Besides BTS can function just fine as units while members enlist, if planned strategically. 

2. Investing in the potential and future. TXT and the new groups have potential to grow. Bighit is no longer just relying on one main group anymore.  These new groups don't have to be at the exact same level as BTS. There's also 17, gfriend, and nuest who are stable and profitable too.

 

Edited May 26, 2020 by satoori

[satoori]

Obviously some people here have not been paying attention to the constant media coverage about BTS and Bighit for the last few years.This IPO is not a surprise. It's expected with how beyond well Bighit have been doing as company.

[satoori]

22 minutes ago, hynapia said:

The first member enlisting will be Jin and he's a very late 92 liner, meaning he can enlist even in mid-2021. The next would be Yoongi (early 93 liner) and he can wait until mid/late 2021 if he wants too. For example EXO's Suho is already 29 (91 liner) and he's just enlisted recently, so Jin and Yoongi could still wait untl they're nearly 29, so that means nearly 2 years with BTS as 7 members. And even with a few members enlisted, they can still make profit with solos/subunits.

Also TxT might isn't in BTS level but for a rookie group they're doing great. They've already sold 500k overall (probably 700-800k when this comeback's sales are counted on Gaon), they chart decently for a rookie, their fanbase is growing. If many companies can do well with groups that have 0 digital power and barely sell 100-150k, BH will still be more than fine even if they only had to depend on TxT.

Exactly.

TXT is never given credit for how much they've done. If it wasn't for Covid they would of been doing a world tour now making even more money for the company and establishing their fanbase. TXT is already showing great growth in Japan. Still one of the best markets for many Kpop companies financially.

[hynapia]

27 minutes ago, satoori said:

Exactly.

TXT is never given credit for how much they've done. If it wasn't for Covid they would of been doing a world tour now making even more money for the company and establishing their fanbase. TXT is already showing great growth in Japan. Still one of the best markets for many Kpop companies financially.

Right? I'm tired of people downplaying them so much simply because they're BTS' juniors and they had super high expectations. Just because you're from a big company or have super popular seniors it doesn't mean you're gonna sell +1M or land a smash hit right from debut. People aren't necessarily gonna stan because you belong to X company or have X seniors. You need to gain your own public and fandom. For example NCT and Stray Kids get shit for not being at the level of other SM/JYP seniors too, but I'd say people are even nastier with TxT. I don't see how a 1 year old group that has already sold over 500k and it's one of the few new gen bgs that chart decently can be considered a "failure". Plus like you said, they already showed decent touring power as newly debuted rookies last year so if they had toured this year their numbers would've been much better.

[RIPHaldir]

3 hours ago, hynapia said:

Right? I'm tired of people downplaying them so much simply because they're BTS' juniors and they had super high expectations. Just because you're from a big company or have super popular seniors it doesn't mean you're gonna sell +1M or land a smash hit right from debut. People aren't necessarily gonna stan because you belong to X company or have X seniors. You need to gain your own public and fandom. For example NCT and Stray Kids get shit for not being at the level of other SM/JYP seniors too, but I'd say people are even nastier with TxT. I don't see how a 1 year old group that has already sold over 500k and it's one of the few new gen bgs that chart decently can be considered a "failure". Plus like you said, they already showed decent touring power as newly debuted rookies last year so if they had toured this year their numbers would've been much better.

TXT are also the first 4th gen group to be certfified by the RIAJ with gold for their debut Japanese single, no other rookie group ( and many have also debuted last year or this year in japan) comes close, their future is bright and people hate to see it

[hynapia]

17 minutes ago, RIPHaldir said:

TXT are also the first 4th gen group to be certfified by the RIAJ with gold for their debut Japanese single, no other rookie group ( and many have also debuted last year or this year in japan) comes close, their future is bright and people hate to see it

Exactly. People love to put the "flop" narrative because they expected them to sell millions and have a top 10 smash hit simply for being from BH and "BTS juniors" but things don't work like that. By that logic, NCT should have tons of daesangs like EXO at this point, Winner/iKON should have as many hits as Big Bang, etc. Not all groups from a company are gonna be the top of the top, but as long they sell well and have a decently sized fandom I don't see how they're a flop. Not to mention they're literally ONE year old. We're seeing groups like NU'EST, BTOB, Oh my girl, SF9 or April literally rising four or even FIVE years after debut so I don't get how everyone is already labeling them as a flop when they're barely one year and have plenty of time to grow. I've seen people even saying BH is doing the Belift project because TxT ended up being a "failure" when the Belift project has actually been planned out for 3 years, way before TxT.

Edited May 26, 2020 by hynapia

[Jollux]

5 hours ago, satoori said:

Lol I can't tell if you're being sarcastic or not?...

By that, I meant to say is, at first, he didn't want to pay them properly, but after the members leaked all the behind the scenes drama and use  that as leverage, the company finally decided to give them a fair cut of the money. BEST KPOP COMPANY.

To be honest any increase would have been a big victory for them compared to what they used to get.

[satoori]

40 minutes ago, Jollux said:

By that, I meant to say is, at first, he didn't want to pay them properly, but after the members leaked all the behind the scenes drama and use  that as leverage, the company finally decided to give them a fair cut of the money. BEST KPOP COMPANY.

To be honest any increase would have been a big victory for them compared to what they used to get.

so you're being sarcastic lmao XDDDDD

but yes before they broke even, they were struggling financially. 

OT: i recommend you watch all of bts docu-series, they have three, to get a real feel about them as group with bighit.