[Click eStock] "YG Entertainment, Strong Earnings Momentum in Second Half... Target Price Up"

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[Asia Economy Reporter Song Hwajeong] NH Investment & Securities raised the target price for YG Entertainment from 62,000 KRW to 71,000 KRW on the 6th, viewing the abundant performance momentum in the second half of the year as positive. The investment rating was maintained as 'Buy.'

Researcher Lee Hwajeong of NH Investment & Securities said, "The target price was raised by 15% reflecting the fandom sales effect from collaboration with Weverse," adding, "It is necessary to pay attention to the mid- to long-term momentum due to the resumption of concert tours and the full-scale fandom business, and although there was no activity in the second quarter, strengthened sales capacity will be confirmed."

The second-quarter performance is expected to meet market consensus. NH Investment & Securities estimated YG Entertainment's consolidated sales for the second quarter to increase by 21% year-on-year to 64.7 billion KRW, and operating profit to rise by 59% to 4.3 billion KRW. The researcher analyzed, "Although the headquarters' performance slowdown compared to the previous quarter is inevitable due to the absence of significant activities, the sales capacity of music and advertising is strengthening due to increased recognition of the main lineup," and added, "Regarding subsidiaries, losses from 'Joseon Exorcist' are not expected to be reflected in the second quarter, and the distribution effect of HYBE albums (TXT, Seventeen) by YG Plus will be reflected from the second quarter."

In the second half of the year, abundant performance momentum such as BLACKPINK's comeback and entry into Weverse is evaluated positively. The researcher explained, "Considering BLACKPINK's online concert ticket sales, the fandom size that can be converted into paying users is estimated to be 200,000 to 250,000," and added, "Assuming an average revenue per paying user (ARPPU) of 70,000 KRW, quarterly Weverse-related commission sales could reflect about 8 billion KRW, and due to the nature of commission sales, it can make a meaningful contribution to performance even considering artist royalties."

Synergy from reopening and strengthening fandom business is expected. The researcher said, "Considering the expansion of concert scale due to BLACKPINK's global recognition increase, the start of Treasure's Japan concerts due to growing recognition in Japan, and expected benefits from the resumption of dome tours through Big Bang's comeback, significant growth in additional sales such as MD (fan merchandise) is also expected simultaneously with the tour resumption," and added, "The lineup expansion through the debut of a new girl group is also positive."

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