Our target price of W145,000 is based on 12-month forward EPS (2H25E-1H26E) and a 22x target P/E, in line with the average of Korean content stocks.

Upside risks to our estimates and TP include: [1] China allowing large-scale concerts of K-pop artists; [2] new artists, especially RIIZE (debuted in 2023) and Hearts2Hearts (2015), ramping up their global fan base earlier than expected; and [3] divestment of remaining non-core subsidiaries, such as KeyEast and SM C&C, and reinvestment of potential proceeds in core music operations. Downside risks include: [1] low hit ratios of new albums or new artists; [2] further investments in experimental projects, such as Dear Alice in the UK; and [3] any unexpected initiative of launching non-core (i.e., non-music) businesses.