[Click eStock] "JYP's Q2 Slump Is a Stepping Stone for Q3 Leap"

One-time cost reflected in Q2 due to China music contract and accounting system setup
Korea Investment & Securities "JYP target price maintained at 52,000 won"

[Asia Economy Reporter Gong Byung-sun] JYP (JYP Ent.) showed disappointing results in the second quarter due to one-time expenses, falling short of market expectations (consensus). However, the return of the idol group Stray Kids from the third quarter is expected to contribute to a rebound.

According to Korea Investment & Securities on the 18th, JYP's second-quarter sales increased by 19% year-on-year to 40.6 billion KRW, and operating profit rose by 6% during the same period to 9.6 billion KRW. However, these figures fell short of the consensus of 45 billion KRW and 15.4 billion KRW by 9.78% and 37.66%, respectively.

One-time expenses negatively impacted the second-quarter results. One-time costs of 2.4 billion KRW were recorded, including 1.3 billion KRW in taxes related to a Chinese music contract and 0.5 billion KRW for accounting system setup. Additionally, selling and administrative expenses increased by 3.4 billion KRW year-on-year due to these one-time costs. As a result, the operating profit margin for the second quarter fell by 2.5 percentage points to 23.6%. Furthermore, some sales of albums and digital music sold in June were deferred to the third quarter, also affecting the results.

However, with the disappearance of one-time expenses and the return of artists, the third-quarter results are expected to rebound. Stray Kids set a new record with 830,000 pre-orders for their August comeback. Park Ha-kyung, a researcher at Korea Investment & Securities, forecasted, “Actual sales will exceed 1 million copies,” adding, “They will establish themselves as JYP’s million-seller artist.” Accordingly, Korea Investment & Securities expects the third-quarter operating profit margin to rebound to 30.9% due to the elimination of one-time expenses and growth in album, digital music, and content sales.

Album sales in Japan by Twice and 2PM, as well as the digital single release by JYP’s rookie group NiziU, are predicted to expand the proportion of overseas sales. Researcher Park explained, “The overseas sales ratio this year is expected to increase by 8 percentage points from last year to 58%,” adding, “The second-quarter slump is a stepping stone for a leap in the third quarter.”

Accordingly, Korea Investment & Securities maintained its investment opinion of ‘Buy’ on JYP with a target price of 52,000 KRW. The closing price on the previous day was 43,400 KRW.

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