Crouching Enter Stocks, Will They Stretch Out in the Second Half?

Momentum Remains with Second Half Rookie Debuts and Established Artist Comebacks

Red Velvet of SM Entertainment (Photo by Sports Today)

[Asia Economy Reporter Geum Bo-ryeong] Although entertainment stocks received a disappointing performance report for the first quarter, attention is focused on whether they will turn to an upward trend in the second half of the year with rookie group debuts, momentum from China, and comebacks of existing artists.

According to the Financial Supervisory Service's electronic disclosure system on the 18th, SM's consolidated first-quarter results recorded sales of 144.7 billion KRW and operating profit of 1.7 billion KRW. Sales increased by 11% compared to the previous year, but operating profit decreased by 40%. YG Entertainment's sales also decreased by 14% from the previous year to 52.8 billion KRW. Operating loss continued at 2.1 billion KRW. Cube Entertainment's sales dropped 37.5% to 5.1 billion KRW, and operating loss turned to 0.5 billion KRW. In the case of JYP Ent., operating profit increased by 132% to 13.4 billion KRW, but this was due to the earlier reflection of Japanese MD (merchandise) sales, which were generally delayed by 4 to 6 months.

'TWICE' under JYP (Photo by Sports Today DB)

The difficulties for entertainment stocks are expected to continue into the second quarter. This is because affiliated artists are unable to carry out normal activities due to the novel coronavirus disease (COVID-19). SM has no concert schedule in the second quarter, and JYP has none in the second to third quarters. NH Investment & Securities researcher Lee Hwa-jung explained, "The poor sales of concerts and MD for entertainment stocks are inevitable."

Expectations are concentrated in the second half of the year. YG confirmed the debut of the male idol group 'TREASURE' in July. JYP plans to debut the Japanese female idol group 'NIZI' in the fourth quarter, and Cube Entertainment plans to debut a male idol group.

Comebacks of existing artists are also expected to act as momentum. YG's 'BLACKPINK' and JYP's 'TWICE' are scheduled to make comebacks in June. Additionally, YG's 'BIGBANG' is scheduled to participate in the American music festival Coachella, making a resumption of activities in the second half highly likely.

'BLACKPINK' under YG (Photo by Sports Today DB)

Expectations for the easing of China's Hallyu ban (Hanhanryeong) still remain. Meritz Securities researcher Lee Hyo-jin said, "Investors' expectations for the entertainment industry, which currently lacks concerts due to COVID-19, are centered on the lifting of the Hanhanryeong," adding, "If the Hanhanryeong is lifted, the benefits to entertainment companies are expected to be indiscriminate."

Yuanta Securities raised JYP's target price from 27,000 KRW to 32,000 KRW and YG's target price from 36,000 KRW to 37,000 KRW.

'(G)I-DLE' of Cube Entertainment (Photo by Yonhap News)

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