[Click e-Stock] YG Entertainment, Time for a Lineup Change

YG Entertainment is expected to report fourth-quarter results that fall short of market expectations for last year. This is attributed to diminished anticipation surrounding BLACKPINK. However, the growth momentum of next-generation idols such as BABYMONSTER remains intact, and there is still optimism regarding BIGBANG's 20th anniversary activities.

On the 27th, Daol Investment & Securities lowered its target price for YG Entertainment by 9.1% to 100,000 won, citing these factors, but maintained its 'Buy' rating. The previous day's closing price was 72,600 won.

For the fourth quarter of last year, revenue was 154.6 billion won and operating profit was 21.4 billion won, up 48.5% and 2047.1% year-on-year, respectively. Nevertheless, these figures fell short of market forecasts, which were 162.9 billion won in revenue and 23.7 billion won in operating profit.

In detail, album and digital music sales are estimated to have generated 8.4 billion won and 17.7 billion won in revenue, respectively. Digital music revenue was steady, but album sales declined by 28% compared to the previous quarter. BABYMONSTER sold 690,000 copies, underperforming expectations, and Kang Seungyoon (WINNER)'s solo album sales of 30,000 copies were reflected.

Concert revenue is estimated at 35.1 billion won. This includes 12 BLACKPINK world tour shows in Asia (580,000 attendees), 10 BABYMONSTER Asia fan concerts (120,000 attendees), 14 TREASURE Asia tour shows (180,000 attendees), and 5 WINNER shows (15,000 attendees), totaling approximately 880,000 attendees. This represents a 487% increase year-on-year. However, due to a revision in royalty policies, the proportion of Japanese concerts reflected as royalties increased from 1% in the previous quarter to 27% in the fourth quarter last year, making a quarter-on-quarter decline inevitable.

MD (merchandise) revenue is estimated at around 27 billion won. With the growth in concert attendance, year-on-year growth is expected to continue. However, as with the previous quarter, the high proportion of overseas pop-up stores, including Japan, means MD revenue recognized as royalties is estimated conservatively.

Lim Doyoung, a researcher at Daol Investment & Securities, stated, "While there is a possibility of announcing additional encore concerts around the release of BLACKPINK's new album on February 27, we have only reflected six shows in our estimates, taking into account the timing of activities, and have revised our projections downward." He added, "BABYMONSTER will begin touring after releasing a new album in the second quarter, which should improve profitability, and the debut of a new boy group within the year will help diversify the portfolio."

On August 15 last year (local time), the first performance of girl group BLACKPINK's world tour 'DEADLINE' in London took place, and in the afternoon, the audience was seen walking in a line toward Wembley Stadium in London, UK. Photo by Yonhap News.

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