Entertainment Stocks, Exciting Again

Second Half Album Releases and Activity Plans Follow One Another... Clear Recovery Trend for YG, JYP, and SM This Month

[Asia Economy Reporter Eunmo Koo] Entertainment stocks, which had shown sluggish stock performance due to a sharp decline in concert revenues caused by the novel coronavirus disease (COVID-19), are attempting a rebound in the second half of the year by leading with the consecutive album release plans of their affiliated artists.

According to the Korea Exchange on the 14th, YG Entertainment's (YG) stock price closed at 48,250 won, up 9.04% (4,000 won) from the previous trading day. During the session, it rose to 50,800 won, setting a new 52-week high. This is the first time in about 1 year and 7 months since January 7 last year (50,800 won) that YG's intraday stock price exceeded 50,000 won.

Entertainment stocks have shown a clear recovery trend since the beginning of this month. JYP Ent. (JYP) rose 23.5% until the previous day, while YG and SM Entertainment (SM) increased by 18.6% and 14.4%, respectively, outperforming the KOSDAQ index return of 4.8% during the same period. The rise in entertainment stocks was led by foreign investors. This month, foreigners net purchased 16.3 billion won and 15.4 billion won worth of JYP and YG stocks, respectively, ranking 7th and 8th among foreign net purchase stocks in the KOSDAQ market, and also net purchased 11.9 billion won worth of SM stocks.

In the second half of the year, major companies are consecutively announcing activity plans for their affiliated artists, which is expected to increase album and music sales, and this is interpreted as reflecting expectations for earnings improvement in stock prices. Previously, entertainment stocks suffered poor stock performance as concert revenues sharply declined due to COVID-19. Recently, better-than-expected music and album sales have been confirmed, and as news of rookie artists' debuts and existing artists' comebacks has become more concrete by company, stock prices have shown an upward trend.

Sung Junwon, a researcher at Shinhan Financial Investment, said, "Entertainment stocks have moved based on earnings generated through the cycle of their affiliated artists' debuts, comebacks, album and music releases, and concert activities." He added, "Although concerts are difficult due to COVID-19, earnings from album and music activities are expected to gradually improve from the second half of this year through the end of 2021, and stock prices are expected to follow a similar trend."

In particular, YG and JYP, which have relatively many album release plans and rookie artist debuts in the second half, are receiving attention. First, YG's rookie group 'Treasure' has recorded the largest pre-order volume ever for their debut album, raising expectations. Nam Hyoji, a researcher at KTB Investment & Securities, analyzed, "The fact that sales were high in overseas regions implies that once full-scale activities begin, the overseas fandom will rapidly increase, and concert and royalty revenues could sharply rise."

JYP is also expected to see increased sales through album activities as their affiliated artists are set to release albums consecutively. Researcher Sung said, "Twice plans an online concert and a Japanese album release in the third quarter, and the Japanese project group 'NiziU' is scheduled to release their official debut album in November, so sales growth through various album activities is expected." He forecasted, "Music and album sales in the second half of the year will increase by at least 24% compared to the first half."

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