Shinhan Financial Investment Report
Operating Profit Forecast of 45.4 Billion KRW for Next Year
[Asia Economy Reporter Minji Lee] Opinions have emerged that JYP Entertainment's performance will decline due to a decrease in performances caused by the novel coronavirus infection (COVID-19). However, the trend of increasing album sales is expected to continue until next year.
According to Shinhan Financial Investment on the 31st, JYP Entertainment's operating profit next year is expected to increase by 7.1% year-on-year to 45.4 billion KRW. Seong Junwon, a researcher at Shinhan Financial Investment, said, "It will not be easy to hold offline performances until the first half of next year," adding, "Album sales are steadily increasing, so the performance trend is relatively stable."
Expectations for NiziU, who will officially debut in Japan at the end of this year, are likely to be reflected in next year's performance. Estimating quarterly operating profits, the fourth quarter of this year is expected to record 11.1 billion KRW, the first quarter of next year 9.4 billion KRW, and the fourth quarter of next year 14.3 billion KRW.
Due to COVID-19, fandom naturally shifted towards album sales. Album sales were not high in the first quarter of this year, but from the second quarter, album sales began to increase significantly. In the third and fourth quarters, whenever individual artists released albums, sales increased compared to last year.
Looking at the album sales growth rate by entertainment company this year, JYP Entertainment increased by 38.6% year-on-year. YG Entertainment is estimated at 183%, Big Hit at 18.3%, and SM at 29.3%. Next year's estimated album sales by company are Big Hit 10.8 million copies (4.4%), SM 5.97 million copies (7.5%), and YG 2.97 million copies (21.8%). Researcher Seong Junwon explained, "If offline performances start as expected in the fourth quarter of next year, the performance, which has already been improving through album sales, will improve further."
Researcher Seong added, "Although performances are difficult due to COVID-19, there are many sales growth events such as increasing album and digital music sales, NiziU's official debut in Japan next month, and other artists' album releases," but "the lowered performance estimates have been reflected, presenting a target price of 42,000 KRW, about 7% lower than before."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
