Eugene Investment & Securities said on the 13th that while Big Bang's comeback appears likely to drive second-half results for YG Entertainment, results are expected to be sluggish through the second quarter.
At the same time, it lowered the target price to 78,000 won from 90,000 won and maintained a Buy rating. YG Entertainment's closing price in the previous trading day was 51,200 won.
Eugene Investment & Securities estimated YG Entertainment's first-quarter revenue this year at 132.5 billion won and operating profit at 17 billion won. That is an increase of 32.3% and 78.8%, respectively, from a year earlier.
Lee Hyeon-ji of Eugene Investment & Securities said, "With Blackpink's comeback driving album sales growth, revenue will grow as Blackpink and Treasure dome tours are reflected."
However, in the second quarter, BABYMONSTER and Treasure are scheduled to return with new releases, and it projected that profits will remain weak in the second quarter following the first, as production costs are recognized upfront and cost burdens rise.
The analyst said, "The first half will likely lack both results and momentum, but the second half has ample potential catalysts," adding, "The biggest driver of second-half results is Big Bang's comeback. Although the schedule has not yet been finalized, we conservatively assume a tour of around 600,000 attendees in the second half."
It also noted that BABYMONSTER's world tour starting in Jun. will be held on a larger scale across more regions than the previous tour. The analyst said, "By expanding the fandom mainly in Western markets, both scale and profitability will improve."
She added, "A new boy group is scheduled to debut within the year, and it is positive that the artist lineup is becoming more diverse."