iM Securities said YG Entertainment (hereafter YG Entertainment) is expected to post results beating market expectations, helped by Big Bang's participation in its 20th anniversary world tour. Accordingly, it raised its target price to 100,000 won from 93,000 won. The previous trading day's closing price was 62,600 won, implying upside of about 59.7%.
Hwang Ji-yeon, an analyst at iM Securities, said, "Given that more than 1 million people attended Big Bang's 10th anniversary tour in Korea, Japan and Hong Kong, the world tour after eight years is also expected to contribute significant profit."
In fact, in 2016 Big Bang held 16 concerts at domes and stadiums in Japan, drawing 1.86 million people, and 29 concerts at arenas in China, drawing 500,000. Revenue came to 94.7 billion won in Japan and 69.1 billion won in China.
However, Hwang said, "With the resumption of concerts in China uncertain and large venues in Japan hard to secure, it is difficult to assume the same scale of performances as in 2016," but added, "High revenue growth will be further supported by expanded MD licensing collaborations with key partners."
In addition, YG's girl group BABYMONSTER's world tour is expected to lift growth potential. Hwang said, "After the new release in May, the group plans to resume its world tour starting in June, expanding tour regions beyond Asia and North America to South America, Europe and Oceania. A significant scale-up versus the 300,000 attendees on the previous tour is expected, and the group will again prove its rapid growth."
The long-cited issue of reliance on a single intellectual property (IP) is also expected to ease. Hwang said, "YG has a small artist roster, leading to high quarterly earnings volatility, but with shorter album release cycles, the return of legacy IP, and plans to debut new groups through next year, quarterly gaps will be minimized and dependence on a single IP will also decrease."
According to the schedule announced so far, new releases are planned for the first quarter Blackpink (Feb.), the second quarter BABYMONSTER (May), Treasure (June), the third quarter Big Bang (assumed) and a Treasure unit, and the fourth quarter BABYMONSTER (Oct.) and the debut of a new boy group.