[Click eStock] "YG Entertainment, Earnings Surprise Without BLACKPINK"

Strengthening Sales Capacity through Expansion of Major Lineup's Fandom
NH Investment & Securities "YG Entertainment Target Price Raised from 71,000 KRW to 85,000 KRW"

[Asia Economy Reporter Gong Byung-sun] YG Entertainment (YG Entertainment) posted second-quarter earnings this year that significantly exceeded market consensus. Although there were no meaningful activities, the expansion of the fandom business is interpreted to have influenced the performance.

According to NH Investment & Securities on the 13th, YG Entertainment's second-quarter sales increased by 56% year-on-year to 83.7 billion KRW, and operating profit rose by 277% during the same period to 10.5 billion KRW. These figures exceed the respective consensus estimates by 27.98% and 169%.

The expansion of the fandom size appears to have positively impacted the results. Starting with Ros?'s solo release this year, the product lineup was expanded to include physical albums and planned merchandise (MD) such as hoodies, demonstrating a commitment to the fandom business. Researcher Lee Hwa-jung of NH Investment & Securities explained, "Despite the absence of meaningful activities, digital sales based on the existing catalog performed well," adding, "The expansion of the fandom size of key lineups strengthened sales resilience."

In the short term, the return of the famous idol group BLACKPINK and their entry into Weverse are expected to act as positive factors. With BLACKPINK's comeback scheduled for the second half of the year, including Lisa's solo and the group's full album, and the securing of sales channels through BLACKPINK's entry into the Weverse Shop, various MD sales are expected to be fully launched. On the 2nd, BLACKPINK joined Weverse and gained 1.7 million subscribers within 10 days. NH Investment & Securities forecasts that BLACKPINK's entry into Weverse will generate total sales in the 200 billion KRW range next year.

In the mid to long term, the resumption of offline concerts and the launch of new lineups are anticipated factors. Although uncertainties due to COVID-19 remain, YG Entertainment is likely to be the biggest beneficiary if offline concerts resume. This is because the scale of BLACKPINK's concerts, whose global recognition has increased, is expected to expand, and idol group TREASURE, which has gained recognition in Japan, is expected to hold concerts there.

Additionally, as BLACKPINK marks its 5th debut anniversary, a new girl group that has been prepared over a long period is also expected to debut. Researcher Lee said, "The official debut of the new girl group is expected early next year," adding, "Promotional content can be confirmed in the fourth quarter."

Accordingly, NH Investment & Securities maintained its 'Buy' rating on YG Entertainment. The target price was raised from the previous 71,000 KRW to 85,000 KRW. The closing price on the previous day was 61,600 KRW.

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