IBK Securities noted on 4th that YG Entertainment's performance in the first quarter of this year is expected to hit a low, and it is projected to show growth due to the effects of Blackpink and BabyMonster. Accordingly, it raised the target price from the previous 65,000 won to 80,000 won, a 23.1% increase, maintaining the investment opinion of 'buy.' The closing price of YG Entertainment on the previous trading day was 61,200 won.
IBK Securities forecasts YG Entertainment's operating profit to return to a surplus of 70.8 billion won this year, and to increase by 22.4% to 86.7 billion won next year. This is attributed to the upward revision of estimated performance for Blackpink and BabyMonster.
Kim Yoo-hyuk, a researcher at IBK Securities, said, "Blackpink is expected to attract over 1 million attendees based on the announced world tour schedule alone," adding, "All of the performances will be in stadiums and domes, and the audience size per show has doubled compared to the previous tour. Considering the potential for expanded scheduling in the fourth quarter of this year and the first quarter of next year, I have increased the attendance assumption from the previous 2 million to 2.5 million."
BabyMonster has also confirmed strong fandom demand, attracting 440,000 attendees during their first world tour, which has been ongoing since January this year. Research Institute Kim stated, "I have also expanded the assumption of album releases from once this year to twice," and added, "As BabyMonster is currently evaluated as a high potential intellectual property (IP) among lower-tier groups, significant growth is anticipated next year."
It is estimated that the revenue and operating profit for the first quarter of this year will be 10.45 billion won, a 19.7% increase from the previous year, and 2.5 billion won, respectively, returning to a surplus. Operating profit is expected to fall short of the market forecast of 4.7 billion won. While concert revenues are expected to show robust growth due to the world tour results of 2NE1, BabyMonster, and Treasure, operating profit is likely to slightly underperform expectations due to increased costs from the expansion of BabyMonster's video content production.
Research Institute Kim noted, "Given that YG Entertainment is projected to show clear performance improvement and multiple expansions until next year, there is plenty of room for stock price growth compared to the current price."