"BTS World Tour Signals Major Uptrend for Entertainment Industry"

Hana Securities: "Record-Breaking Results If Even Big Bang Makes a Comeback"
"Overweight HYBE Up to 15 Trillion Won Market Cap"

Yonhap News Agency

Recently, entertainment stocks have underperformed. Since stock prices tend to move ahead of expectations, there has been a lack of upward momentum in earnings, such as the announcement of large-scale world tours by Stray Kids and Blackpink.

On October 10, Hana Securities stated in its report, "Entertainment: Historical Momentum Will Be Reflected Over the Next Six Months," that "the key momentum is the announcement of BTS's tour, which will soon lead to a significant earnings upgrade and stock price increase in 2026." The firm maintained its "Overweight" recommendation.

Third Quarter Earnings Estimates for the Four Major Entertainment Companies

Hana Securities projects that for the third quarter, YG Entertainment will outperform expectations, SM Entertainment and JYP Entertainment will meet projections, and HYBE will fall short. The estimated operating profits for the third quarter are 3.37 billion won for YG Entertainment (a turnaround from a loss in the same period last year), 5 billion won for SM Entertainment (up 275%), 5.08 billion won for JYP Entertainment (up 5%), and 3.36 billion won for HYBE (down 38%).

YG Entertainment is expected to exceed estimates as Blackpink's world tour, which began in July, contributed to its results. SM Entertainment is likely to see increased merchandise sales through major artist comebacks and pop-up stores for acts such as Aespa and NCT Dream. JYP Entertainment is also expected to post positive results thanks to album releases and tours by Stray Kids and Twice. However, HYBE's revenue is expected to be in line with projections, but operating profit is likely to decrease as over 30 billion won was spent on production costs for the debut of artists such as Kordis, a Latin band, and a new boy group.

Possibility of Big Bang's Comeback Following BTS

Except for last year, when BTS members were serving in the military, the K-pop industry has grown every year over the past decade. The one-year world tour completed by Stray Kids (JYP) in July demonstrated a significant earnings surprise based on K-pop concerts. If Blackpink's (YG) world tour, which runs from July this year through January next year, also delivers a surprise, there is potential for stock price momentum from other K-pop group comebacks.

Next year, BTS (HYBE) is expected to resume full group activities after completing their military service. BTS's revenue is expected to be at a level similar to the combined revenue of JYP Entertainment and YG Entertainment. Additionally, there is growing anticipation for Big Bang (YG) to resume full group activities for the first time in about a decade, coinciding with their 20th anniversary. Considering that YG Entertainment's revenue was about 360 billion won last year when Blackpink did not have full group activities, the resumption of Big Bang's tour is also expected to generate a similar level of revenue. Hana Securities analyzed, "If BTS and Big Bang resume activities simultaneously, it is only natural that the entire K-pop industry will achieve record-breaking results."

Lee Kihun, an analyst at Hana Securities, stated, "From October to November, when the comeback and tour announcement of BTS, the possibility of Big Bang's comeback, and continued earnings momentum (with SM Entertainment and YG Entertainment recording earnings surprises for three consecutive quarters) are all confirmed, through the first half of next year, will be the long-awaited conviction overweight period." He added, "We recommend a continued overweight position in HYBE up to a market capitalization of 15 trillion won (based on an expected P/E of 40 in 2026), and we are raising the target price for YG Entertainment to 145,000 won (up 12%) to reflect expectations for third-quarter results and Big Bang's full-group tour in 2026."