[Click eStock] "JYP Entertainment Achieves Solid External Growth in Q2"

KB Securities Report

[Asia Economy Reporter Minji Lee] KB Securities maintained its buy rating and target price of 48,000 KRW for JYP Entertainment (JYP Ent.) on the 7th. This is based on the judgment that major artists will actively promote albums in the second quarter, achieving solid external growth.

The company's sales in the second quarter are estimated to increase by 42% year-on-year to 48.5 billion KRW. Operating profit is expected to grow by 82% to 16.5 billion KRW, which aligns with the market consensus of 15.8 billion KRW. Album sales are projected at 1.5 million copies, with TWICE at 500,000, NiziU at 500,000, ITZY at 400,000, and DAY6 at 100,000 copies. The 2PM album released on the 28th of last month is expected to be reflected in third-quarter sales.

Seonhwa Lee, a researcher at KB Securities, said, "TWICE, NiziU, ITZY, and DAY6 are releasing albums, so an increase in new album sales is expected. Existing album sales are also increasing, leading to external growth centered on album and digital music sales."

As COVID-19 eases, the advertising market is also expected to see a boost, with advertising revenue projected to increase by about 1.5 billion KRW compared to the previous quarter. YouTube channels are also expected to generate about 5 billion KRW in revenue due to an increase in new content. However, offline performances have not been held, so MD sales are analyzed to stagnate at around 3 billion KRW. Researcher Lee said, "The company is considering medium- to long-term investments in MD distribution platforms to diversify merchandise products so that MD sales can steadily occur even without performance activities, unlike competitors."

In the third quarter, releases are expected including TWICE's Japanese full album, Stray Kids' comeback, ITZY's digital album, 2PM's Japanese album, DAY6's unit album, and NiziU's digital music release. The new boy group selected through the LOUD project is scheduled to debut in the first half of next year. Researcher Lee added, "From a longer-term perspective, various investments are being made in the metaverse area, and the fan community platform business is being developed through DearU. We will also make meaningful investments in the joint venture (JV) established with Dunamu to enter the NFT business."