[Click eStock] "JYP Entertainment, Overseas Division Sales Growth Expected"

Korea Investment & Securities Report

[Asia Economy Reporter Minji Lee] Korea Investment & Securities maintained a buy rating and a target price of 48,000 KRW on JYP Entertainment on the 19th, expecting improved performance this year due to a solid artist lineup.

In the fourth quarter, JYP Entertainment recorded sales and operating profit of 41.7 billion KRW and 10.5 billion KRW respectively, down 6% and 22% year-on-year. Operating profit fell about 13% short of the market expectation of 12 billion KRW, but considering one-time expenses such as incentives (1 billion KRW) and consulting fees (700 million KRW), it appears to be in line. Net profit was 5.8 billion KRW, down 8% year-on-year, as a 2.5 billion KRW loss from the Optimus fund investment was recognized.

Music album and digital music sales surged 47% year-on-year to 24.4 billion KRW. Album sales in the fourth quarter increased 39% year-on-year to 1.04 million copies. Overseas sales showed remarkable growth, with digital and album sales of NiziU, who debuted in December last year, contributing about 4 billion KRW, resulting in 9.8 billion KRW, a 95% increase compared to a year ago. Japanese digital and album sales rose about 140%, making overseas sales account for 53% of total sales in the fourth quarter.

Due to offline constraints, management sales dropped about 54%. As content diversified, YouTube sales increased by about 102%. Park Hak-kyung, a researcher at Korea Investment & Securities, explained, “Gross profit margin improved by 1.3 percentage points due to increased sales of high-margin content and overseas sales,” adding, “Production costs in the content division decreased by 12%, but sales increased by 54%, demonstrating leverage creation capability.”

Although the departure of GOT7, which recorded annual sales of 20 billion KRW, is regrettable, 2PM and Stray Kids are expected to fill the gap. Stray Kids’ overseas fandom is growing, and TWICE is expected to increase management sales as individual activities become possible this year. Additionally, NiziU Boy is scheduled, so Japanese sales are expected to show high growth.

Researcher Park said, “With 2PM, NiziU, and TWICE capable of dome tours, sales are expected to reach about 7 billion KRW when performances resume in the second half of the year,” and added, “Following the Chinese digital music contract, a local Chinese idol debut is planned next year, so the proportion of overseas sales is expected to expand to 57% next year.”

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