iM Securities said on the 10th that YG Entertainment's third-quarter results fell short of consensus (market expectations). It maintained a Buy rating but cut its target price by 7.69% to 120,000 won from 130,000 won. YG Entertainment's previous closing price was 72,000 won.
iM Securities assessed that YG Entertainment's third-quarter results were lacking compared with heightened market expectations for BLACKPINK's MD sales amid the group's ongoing large-scale stadium tour.
BLACKPINK's third-quarter MD revenue was 28.1 billion won, up 102% from the same period a year earlier. iM Securities said the performance fell short of consensus compared with the previous world tour's peak quarterly MD revenue of 24.4 billion won.
YG Entertainment's third-quarter revenue was 173.1 billion won, up 107% from the same period a year earlier. Operating profit came to 31.1 billion won, turning to the black from an operating loss of 3.6 billion won in the same period last year, according to preliminary figures.
Concert revenue was 50.8 billion won, up 1,528% from the same period a year earlier, marking an all-time high. The tally reflected 15 BLACKPINK stadium tour dates and 6 BABYMONSTER North America tour dates. In the fourth quarter, 12 BLACKPINK shows, 14 TREASURE shows, and 10 BABYMONSTER fan-cons are scheduled.
Hwang Ji-won, an analyst at iM Securities, said, "The growth potential of mid-to-lower seniority IP, such as BABYMONSTER and TREASURE, is positive," and added, "A short-term stock correction is inevitable, but considering next year's BLACKPINK tour schedule, for which additional announcements are expected, expectations for a Big Bang tour, and BABYMONSTER's high growth and plans to debut a new group, we judge there is still room for the stock to rise."
However, the firm said it lowered its target price by 7% as it revised down next year's estimated earnings per share (EPS).
Hwang said, "There is a need to shift the timing of BLACKPINK's new music release from the fourth quarter to the first quarter of next year," adding, "We also revised down our fourth-quarter earnings estimates as we tempered expectations for MD sales."