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JONBUR Research · Initiation

SM Entertainment · 041510 · Entertainment

SM Entertainment: Steady Operating Profit, Share Price Down 39.8% Over One Year

Why this report

Start of coverage: one of the 300 largest companies, written once its financial statements were in.

SM Entertainment (KOSDAQ: 041510) closed at ₩76,000 on 2026-10-12, down 39.8% over one year and 9.5% over one month. Trailing revenue reached ₩1.27T with a 15.3% operating margin, while a DCF-based model estimate sits well above the current price.

Written Oct 13, 2026 · Data as of Oct 12, 2026 · 0 views

This is not financial advice. The report does not recommend buying or selling anything.

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Thesis

The data supports a picture of growing revenue and improved operating margins since 2024, with low borrowings and solid free cash flow. Revenue rose from ₩701.6B in 2021 to ₩1.17T in 2025, and the TTM operating margin of 15.3% is above the 8.8% seen in 2024. The share price has moved the other way: it is 45.9% below its 52-week high of ₩140,400 and 18.9% above its low of ₩63,900. The data does not explain the price fall. Investor flows, foreign ownership and short balance are not available, so the drivers of demand cannot be assessed. One news headline from The Korea Economic Daily describes the stock as undervalued, but that is an opinion and not evidence from the filings.

Business overview

SM Entertainment is a KOSDAQ-listed entertainment company, founded on 1995-02-14 and listed on 2000-04-27. It has 22,894,690 listed shares and a market capitalization of about ₩1.74T. Co-CEOs are 장철혁 and 탁영준. Revenue grew each year in the data: ₩701.6B (2021), ₩850.8B (2022), ₩961.1B (2023), ₩989.7B (2024) and ₩1.17T (2025). Growth was 18.7% in 2025 after only 3.0% in 2024. The data does not break down revenue by segment or artist.

Financial analysis

Figures come from filed financial statements (DART). TTM to H1 2026: revenue ₩1.27T, operating income ₩194.3B (15.3% margin), net income ₩131.7B (10.4% margin) and ROE of 15.5%. Operating income was ₩183.0B in 2025 and ₩87.3B in 2024. Net income of ₩347.2B in 2025 was well above operating income of ₩183.0B, which lifted ROE to 41.6%. The data does not state the cause, so it should not be treated as a recurring level. TTM net income of ₩131.7B is much lower. The balance sheet looks conservative: liabilities to equity of 45.0%, cash of ₩371.1B against borrowings of only ₩6.3B. TTM free cash flow is ₩187.4B.

Valuation

At ₩76,000 the stock trades at a P/E of 13.2, P/B of 1.7, P/S of 1.4 and a dividend yield of 2.4%. Enterprise value is ₩1.38T; EV/EBITDA is not available. Year-end 2025 multiples were P/E 8.9 and P/B 3.1, so P/B is lower now, while P/E is higher because trailing earnings no longer include the large 2025 net income. Among peers, only HYBE has a P/B in the data (1.9); other peer multiples are not available, so a broader comparison cannot be made. HYBE's market cap is ₩6.5T versus ₩1.3T for JYP Entertainment and ₩724.3B for YG Entertainment. The valuation model is a 5-year DCF at a 5.3% rate, based on TTM to H1 2026. It gives a model estimate of ₩209,327 per share in the base case, ₩123,946 in the bear case and ₩388,403 in the bull case. This is a model estimate based on the assumptions shown, not a target. Even the bear case is above the current price, which mostly shows how sensitive DCF outputs are to the assumptions, notably the low 5.3% rate.

Catalysts

  • The half-year report for June 2026 was filed on 2026-08-14, and preliminary earnings on 2026-08-05, giving the latest read on the TTM margin of 15.3%.
  • An IR event was held on 2026-07-23, and the next set of quarterly results will show whether the operating margin holds.
  • 5%+ holding reports were filed on 2026-06-12 and 2026-08-19, indicating changes in major shareholdings, though the data does not give details.
  • A 2026-10-13 news headline calls the stock undervalued, which may draw attention to it.

Risks

  • The share price is down 39.8% over one year and 9.5% over one month, showing weak recent market sentiment.
  • 2025 net income of ₩347.2B far exceeded operating income, so earnings and ROE of 41.6% may not repeat; TTM ROE is 15.5%.
  • Operating margins have varied between 8.8% and 15.6% in the past five years, so profitability is not stable.
  • The DCF model estimate is very wide (₩123,946 to ₩388,403) and depends on a 5.3% discount rate, which limits its reliability.
  • Investor flows, foreign ownership, short balance and most peer multiples are not available, so market positioning cannot be assessed.

Closing view

The filed numbers show a company with growing revenue, a higher operating margin than in 2024, low debt and strong cash flow. The market has priced it lower over the past year, and the current multiples (P/E 13.2, P/B 1.7) are modest against the 2025 earnings peak but not clearly low against TTM earnings. The model estimate is far above the share price, but it is sensitive to its assumptions and should be read with caution. Missing flow and peer data limit the conclusions, and the data does not show whether the recent margin level is sustainable.

Model estimate of fair value

Bear
₩123,946
+62%
Base
₩209,327
+174%
Bull
₩388,403
+408%

Model estimate based on the assumptions shown. Not a price target and not a buy or sell signal.

Base case of the 5-year discounted cash flow model on the stock's Valuation tab (statements TTM to H1 2026; discount rate 5.3%). Bear and Bull move the main assumptions by fixed steps. See and change the assumptions

Filings and data used

Report history

  1. Oct 13, 2026InitiationStart of coverage (300 largest)SM Entertainment: Steady Operating Profit, Share Price Down 39.8% Over One Year

Built only from jonbur's own data: prices and investor flows, filed financial statements and filings, and news headlines. Disclosed (filed) data is labelled as such. Written by AI and may contain mistakes.

This is not financial advice. The report does not recommend buying or selling anything.

Source: KRX statistical information