Eugene Investment & Securities said on the 15th that the expansion of Western fandom for Stray Kids and TWICE is again creating a virtuous cycle that is translating into album and merchandise (MD) sales for JYP Entertainment. It maintained a Buy rating and a target price of 88,000 won. The previous day's closing price was 59,000 won.
In the first quarter of this year, JYP Entertainment posted revenue of 186 billion won and operating profit of 33.4 billion won. Revenue and operating profit rose 32% and 70%, respectively, from a year earlier, beating the market consensus.
Lee Hyun-ji, an analyst at Eugene Investment & Securities, said, "Despite a gap in new releases by major artists, performances and MD sales expanded significantly and drove results," adding, "What is encouraging is that the improvement in profitability was far greater than the top-line growth."
For albums, Western sales of Stray Kids' previous releases were reflected again in the first quarter after the fourth quarter of last year. Lee explained that, in addition to a higher average selling price (ASP) than in Korea, the exchange rate effect made a meaningful contribution to album sales.
For digital music, YouTube revenue of about 5 billion to 6 billion won per quarter was reclassified as music revenue, leading to an increase. For MD, with diversification of performance MD sales channels such as TWICE's overseas tour MD and city pop-ups and TWICE and SKZ character collaborations, along with strengthening of the IP licensing business, both scale and profitability showed solid growth.
In the second quarter of this year, tour-linked pop-ups in nine cities across North America, Japan and Europe for TWICE are also set to launch. A global pop-up for SKZ is planned to expand sequentially to major global cities after starting in Seoul in April.
The analyst said, "In key base regions such as the United States, Japan and China, we will expand tour-linked pop-up MD for companywide artists by strengthening local MD planning capabilities based on partnerships," adding, "Through expanded global collaborations of character intellectual property (IP), MD is expected to grow continuously."
She added, "As the expansion of Western fandom for SKZ and TWICE again shows a virtuous cycle that is translating into album and MD sales, the comebacks of early-year artists such as NMIXX and KickFlip will follow sequentially in the second quarter," noting, "The solid growth of overseas fandom, elevated through global tours, will become visible in the numbers."