iM Securities on the 24th said that, for JYP Entertainment, the top priority over the long term is to lower its earnings reliance on higher-tenure groups and prove the growth potential of lower-tenure groups. It maintained a Buy recommendation. Reflecting the overall sector valuation decline, it lowered the target price by 10% to 90,000 won. JYP Entertainment's previous day's closing price was 63,000 won.
JYP Entertainment is continuously strengthening its high-margin merchandise (MD) business centered on key intellectual property (IP), including a city-specific limited-goods (MD) sales strategy and global character pop-ups. iM Securities had expected the timing for Stray Kids' new album and tour resumption to be in the second half, but said that, as character (SKZOO) pop-ups roll out globally starting this month, the company will likely minimize any earnings gap. Multiple large-scale concerts by TWICE in Japan are also scheduled to be held in the coming second quarter.
Hwang Ji-won, an analyst at iM Securities, said, "The base is high because of last year's large-scale stadium tour by Stray Kids," and added, "However, if MD sales from TWICE's city-by-city pop-ups in North America exceed expectations, earnings estimates for Stray Kids' North American activities could be revised upward."
JYP Entertainment is expected to focus this year on growing existing lower-tenure groups rather than debuting additional rookie groups. Hwang said, "In the short term, the timing of Stray Kids' North American tour resumption is important, but in the long term, the top priority is to lower earnings reliance on higher-tenure groups and prove the growth potential of lower-tenure groups."
For the first quarter of this year, revenue and operating profit are forecast at 156 billion won and 27.5 billion won, respectively. These represent increases of 11% and 40% year over year and are seen as in line with consensus.
Expectations for lower-tenure groups also surfaced. NMIXX, in its fifth year since debut, is currently on its first world tour. All 11 dates of the North America-Europe tour, totaling 40,000 seats, sold out.
Hwang said, "As NMIXX is set to release a new album in May, if key indicators confirm an uptrend, we can look forward to a larger scale for the next tour."
Girlset, a U.S.-localized girl group, has released three digital singles since its rebranding in Aug. last year. NEXZ is in a position to tour at arena scale in Japan and plans to expand activities centered on Asia.
KickFlip, which released three new albums just last year, is seeing its first-week sales steadily rise by 10%–20% each time. Hwang said, "KickFlip is expected to slowly build its core fandom through frequent activities this year as well."