YG Entertainment Gains Attention as a Leading Next-Generation China-Related Stock

[Asia Economy Reporter Oh Ju-yeon] SK Securities has identified 'YG Entertainment' as the next-generation leading stock related to China. Although short-term earnings are inevitably impacted by the novel coronavirus disease (COVID-19), a full-scale earnings recovery is expected from the second half of the year due to the comebacks of BLACKPINK and Big Bang.

On the 30th, Jeon Young-hyun, a researcher at SK Securities, stated, "Considering the recent increase in BLACKPINK's recognition in China and Big Bang's return, if China's ban on Korean entertainment (Hallyu ban) is eased, YG Entertainment is expected to demonstrate the fastest market dominance in local Chinese performances alongside BTS," adding, "It will be prominently highlighted as the next-generation leading stock related to China."

He also assessed that there is abundant momentum from new artists.

Researcher Jeon said, "We anticipate the debut of the new male group TREASURE in the third quarter, and a new female group set to follow BLACKPINK is also preparing to debut early next year," emphasizing, "Considering the earnings turnaround along with the abundant momentum from the major entertainment company's Big Hit's listing and the easing of the Hallyu ban, we believe YG Entertainment has the greatest medium- to long-term stock price growth potential within the industry."

Additionally, YG Entertainment's first-quarter sales are expected to be 55 billion KRW, with an operating loss of 1 billion KRW, falling short of the market consensus operating profit of 1.6 billion KRW.

This is explained by the poor first-quarter performance due to a low number of concerts. It is expected that sales from WINNER's Southeast Asia concerts (5 shows), last year's fourth-quarter iKON Japan tour (9 shows), and BLACKPINK's dome concert (1 show) will be reflected. Furthermore, due to the impact of COVID-19, earnings including domestic and overseas performances and royalty income are expected to hit a bottom in the second quarter and then trend upward in the second half of the year with the comebacks of major artists.

Reflecting this, the investment opinion was maintained as 'Buy' and the target stock price was kept at 41,000 KRW.

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