On Nov. 11, iM Securities projected that YG Entertainment will record its largest ever performance bolstered by the achievements of the BLACKPINK world tour. Accordingly, the investment recommendation remains 'buy', and the target price has been raised from 112,000 won to 130,000 won. On the previous trading day, YG Entertainment's closing price was 93,200 won.
YG Entertainment announced on the 8th that its operating profit for the second quarter this year, on a consolidated basis, recorded 8.4 billion won, a turnaround from an operating loss of 11 billion won in the same period last year. Revenue reached 100.4 billion won, an increase of 11.6% compared to the same period last year. Net profit turned positive at 11.2 billion won.
Hwang Ji-won, an iM Securities analyst, said, "Since the second half of last year, we have recorded results that exceeded the consensus for four consecutive quarters, and this is very encouraging given that it is before the large-scale world tour revenue from BLACKPINK is reflected." He noted, "As the external growth of low-tier intellectual properties becomes visible, the operating leverage effect due to growth in high-margin digital music and merchandise sales, as well as production cost efficiencies, is continuing."
He added, "Currently, the scale of BLACKPINK's tour that has been announced is more than double the number of attendees per show compared to the previous tour," and said, "In conjunction with the strengthened merchandise strategy, the performance expectations can only rise."
He predicted, "With the resumption of BLACKPINK's world tour in July, pop-up stores are being held globally, especially in five regions in China starting from August, large-scale pop-ups are underway," and added, "The profit leverage from the rapid growth of overseas merchandise sales is expected to kick in, particularly through the expansion of merchandise lineups that have mass appeal for everyday use, such as character products, and collaborations with local brands can maximize revenue."
He emphasized, "The release schedules of new albums from major groups are also lining up, with TREASURE in September, BABYMONSTER in October, and BLACKPINK releasing an album within the year," and said, "Considering the debut plans for the new boy group next year and the new girl group thereafter, the dependence on a single intellectual property is expected to gradually decrease."
Among K-pop groups, the top five groups by monthly YouTube views are BLACKPINK, TWICE, BTS, BABYMONSTER, and Stray Kids. Excluding BABYMONSTER, all are veteran groups after re-contracting. Analyst Hwang Ji-won noted, "BABYMONSTER, in its second year since debut, is expanding its global fandom base at an unusually rapid pace and is preparing for its first North American tour in the third quarter," and added, "The growth in tours, merchandise, and digital music focusing on low-tier intellectual properties is leading to improved profitability."