Will Underperforming Entertainment Stocks Grow in the Second Half?

Twice under JYP Entertainment (Photo by Asia Economy DB)

[Asia Economy Reporter Kum Boryeong] There is growing interest in whether entertainment stocks, which have been sluggish so far, can grow from the second half of this year.

According to Hana Financial Investment on the 12th, the estimated operating profits for major entertainment companies in the first quarter of this year are JYP Ent. 5.8 billion KRW, SM 2.0 billion KRW, and YG Entertainment (YG) -1.5 billion KRW. Lee Ki-hoon, a researcher at Hana Financial Investment, explained, "As mutual entry bans between countries have expanded, most concerts, which are major revenue sources, have been canceled or postponed. In the short term, companies with lighter selling and administrative expenses will perform better, and from this perspective, JYP has the highest visibility for first-half performance."

In the second quarter, BTS's stadium tours in the US and Europe, as well as TVXQ and TWICE's dome concerts in Japan, have already been canceled or postponed, or are highly likely to be. However, with the comeback of major artists, album and digital music sales are expected to contribute as anticipated, so profits are expected to increase compared to the first quarter. The estimated operating profits for the second quarter are about 9.4 billion KRW for JYP and 700 million KRW for YG.

JYP is expected to see further momentum toward Japan as the Japanese group NIZI Project is set to debut in the second half of the year. Lee Hyo-jin, a researcher at Meritz Securities, analyzed, "Despite the planned debut of a new Japanese group, JYP has a low cost burden due to the project structure, and its simple group structure consisting only of Japanese and Chinese subsidiaries supporting artist activities means that even if the COVID-19 pandemic prolongs, the related cost burden is the lowest."

TVXQ under SM Entertainment (Photo by Asia Economy DB)

SM is expected to debut a new girl group in the second quarter. Researcher Lee Ki-hoon said, "As TWICE and BLACKPINK enter their 4th to 5th years, competition among groups targeting the next generation will intensify. Considering that Red Velvet's fandom size was somewhat disappointing compared to Girls' Generation or competing groups, this will be a very important momentum. Since a new male group debut is also being prepared within a year, the potential for valuation expansion will be determined by the growth of these rookie groups."

YG's most important momentum is BLACKPINK's comeback and the debut of TREASURE12. Although BLACKPINK's comeback schedule has been delayed more than expected due to COVID-19, expectations for this comeback are high. In the second half, Big Bang's first Japan and global tours are also expected to take place. Lee Hwajeong, a researcher at NH Investment & Securities, said, "The existing investment points of rookie debuts (TREASURE12 and a total of two female rookie groups), lineup expansion through Big Bang's comeback, and efforts to structurally improve the business model remain valid."

BLACKPINK under YG (Photo by Asia Economy DB)

This content was produced with the assistance of AI translation services.