[Click eStock] "YG Entertainment, 3Q Consecutive 'Surprise Earnings'"

Offline Concerts Resume and Anticipation for Big Bang's Comeback Grows↑

The group BLACKPINK is performing at the online concert 'THE SHOW,' which was live-streamed on YouTube on the afternoon of January 31.
[Image source=Yonhap News]

[Asia Economy Reporter Minwoo Lee] YG Entertainment has recorded surprising earnings that exceeded market consensus for three consecutive quarters. There are expectations that earnings could improve further as offline performances resume.

On the 12th, Hana Financial Investment maintained a 'Buy' rating on YG Entertainment and raised the target price by 16% to 94,000 KRW. The closing price the previous day was 72,400 KRW.

YG Entertainment reported consolidated sales of 86 billion KRW and operating profit of 17.3 billion KRW for the third quarter of this year. Compared to the same period last year, sales increased by 28.6% and operating profit surged by 946.6%. The operating profit exceeded market expectations by 25.8%. On a separate basis, operating profit reached 7 billion KRW, a 255% increase year-on-year, driven by Lisa's solo album release. YG Plus recorded its highest-ever operating profit of 10.8 billion KRW, reflecting valuation gains related to 'Maxst' (approximately 7.5 billion KRW) and revenue from HYBE's album and music streaming. This represents an increase of about 320% compared to the same period last year.

With the resumption of offline performances becoming more visible, expectations are rising for performances by major artists and the return of Big Bang when the 'travel bubble' with Japan restarts. Lee Ki-hoon, a researcher at Hana Financial Investment, said, "Considering profits, growth drivers, and collaboration with HYBE, the upward trend is expected to continue. The 2022 operating profit consensus was underestimated, but with valuation gains from Zepeto and the resumption of offline performances, along with merchandise sales conducted through the Weverse platform, record-high profits are expected once again."

In particular, Big Bang's comeback is expected to significantly boost earnings. In 2017, YG Entertainment's separate operating profit was 25.8 billion KRW. Since Blackpink was in its debut year and contributed minimally, Big Bang bore about 40 billion KRW in selling and administrative expenses at that time. Even excluding approximately 18 billion KRW in sales from China, Big Bang's contribution profit was around 40 billion KRW. The researcher analyzed, "Even with conservative distribution due to contract renewal and assuming 800,000 to 900,000 attendees at Japanese concerts, the annual contribution is expected to be between 20 billion and 30 billion KRW. Considering Blackpink's offline performances and YG Plus's growth, the investment appeal remains high."

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