YG Entertainment, Growing Expectations for Earnings Improvement

[Asia Economy Reporter Song Hwajeong] Expectations for improved performance of YG Entertainment are growing as album sales surge.

According to Shinhan Financial Investment on the 5th, YG Entertainment's album sales in the 4th quarter are expected to exceed approximately 1.5 million copies, surpassing the combined sales from the 1st to 3rd quarters of this year.

In particular, an online concert is scheduled for December. BLACKPINK is set to hold YG Entertainment's first online concert via YouTube on the 27th. Seong Junwon, a researcher at Shinhan Financial Investment, said, "Although the online concert is a one-time event, after paying a certain fee to YouTube and deducting various performance-related costs, it is highly likely to exceed the break-even point (BEP). Ticket prices are 36,000 KRW and 48,000 KRW, and with BLACKPINK's 54 million YouTube subscribers, it is quite feasible to predict ticket purchases in the hundreds of thousands."

Considering album sales and online concert revenue, Shinhan Financial Investment estimated YG Entertainment's consolidated operating profit for the 4th quarter to surge 919.5% year-on-year to 10.3 billion KRW. Operating profits for this year and next year are projected at 13.2 billion KRW and 33.2 billion KRW, respectively, representing increases of 550.3% and 152.4% compared to the same periods last year. Researcher Seong explained, "We assume that domestic and international concerts will be impossible next year, but online concerts can be held at least once in each half of the year. Album sales are expected to continue the upward trend seen this year."

Reflecting expectations for improved performance, Shinhan Financial Investment raised YG Entertainment's target stock price from 50,000 KRW to 58,000 KRW. Researcher Seong said, "We raised future earnings estimates due to album sales and new online concert revenues exceeding expectations. The sustained growth in album sales, anticipation for online and offline concerts, and expectations for the lifting of China's Hanhanryeong restrictions are overlapping, making a gradual upward trend in stock price highly likely."