[Click eStock] "JYP Entertainment, Adjustment Period Expected Until Profitability Recovery... Target Price Down"

Target Price Lowered by 4% Compared to Previous Level

Hana Securities on the 18th downgraded the target price of JYP Ent. from 94,000 KRW to 90,000 KRW, anticipating that the stock price will undergo a correction until profitability recovery is confirmed. The investment rating was maintained as 'Buy.'

Lee Ki-hoon, a researcher at Hana Securities, stated, "Due to the fourth-quarter earnings falling short of expectations last year and the profitability deterioration of Blue Garage, which is difficult to convince investors, we removed the valuation premium factor and lowered the target price by 4% compared to the previous level." He added, "With Stray Kids' concert scheduled to be the highest ever, at the current stock price level with a projected 2025 price-to-earnings ratio (PER) of about 19 times, further declines are expected to be limited. However, the stock price will likely undergo some period of adjustment until profitability recovery is confirmed." He continued, "From the second quarter, SM's growth, reflected through DearU's consolidation, is expected to be higher, so we are excluding it from our top picks."

JYP Ent. recorded sales of 199.1 billion KRW in the fourth quarter of last year, a 27% increase compared to the same period the previous year, and an operating profit of 36.9 billion KRW, a 3% decrease. The researcher analyzed, "Although the operating profit met consensus (average securities firm forecast), considering the sales surprise, it was a disappointing level. In operating expenses, part of the production costs for 'The Ddanddara' and Blue Garage recorded an operating loss of 1.2 billion KRW despite sales of 28.9 billion KRW, resulting in poor performance."

He expressed the opinion that the historic tour momentum of Stray Kids needs to be confirmed. Lee said, "The second and third quarter earnings, reflecting Stray Kids' large-scale North and South America tour, will be very important for the future of the entertainment agency industry. Looking at concert sales alone, JYP Ent. is expected to see a sharp increase from 63.2 billion KRW in 2023 to 202.8 billion KRW in 2025. The total expected tour audience of 2.2 million is the highest ever for K-pop, and quarterly operating profit is expected to reach around 60 billion KRW for the first time." He added, "If these high expectations are met, confidence in earnings forecasts could significantly increase not only for YG Entertainment but also for HYBE in 2026."

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