[Click eStock] "YG Entertainment, Expecting a Significant Turnaround to Profit... Target Price Up"

Target Price Raised by 18.8% Compared to Previous Estimate

On the 23rd, KB Securities raised the target price for YG Entertainment from 48,000 KRW to 57,000 KRW, expecting a significant turnaround to profitability this year. The investment rating was maintained at 'Buy.'

Lee Seonhwa, a researcher at KB Securities, stated, "The new intellectual property (IP), Baby Monster, is showing rapid growth and accelerating its transition to monetization. With growing anticipation for Blackpink's full-group activities in the second half of the year and a low base in 2024, a significant turnaround to profitability is expected. By discontinuing non-core businesses such as actor management to focus on its core business, the competitiveness of the music business will be strengthened," she explained.

YG Entertainment's fourth-quarter results last year are expected to fall short of market expectations. The researcher said, "Consolidated sales for the fourth quarter are expected to be 91.9 billion KRW, down 16% year-on-year, with an operating loss of 8.8 billion KRW, turning to a deficit and falling short of the consensus operating loss of 800 million KRW. Costs increased due to the production of content in preparation for Baby Monster's first full album and world tour, and amortization expenses related to Blackpink's exclusive contracts amounting to about 4 billion KRW per quarter will continue to cause operating losses," she analyzed.

This year, contributions from Baby Monster's performance are anticipated. Baby Monster will start their world tour at the end of January in Seoul. The researcher noted, "Based on the currently announced concert schedule, approximately 300,000 attendees are expected, and in addition to concert revenue, sponsorship and MD (merchandise) sales are expected to increase. Given the unusually rapid pace of an arena-level world tour, it is expected that monetization will succeed this year and contribute to performance," she forecasted.

In the second half of the year, a world tour by the full group of Blackpink is scheduled. The researcher said, "Although the absence of a new album release is somewhat disappointing, Blackpink members are actively engaged in individual activities, so the tour scale and guarantee amounts are expected to expand in line with their increased recognition."

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