[Click eStock] "YG Entertainment, BLACKPINK Comeback... MD Sales Expansion Expected"

Korea Investment & Securities Report

[Image source=Yonhap News]

[Asia Economy Reporter Minji Lee] Korea Investment & Securities maintained a buy rating and a target price of 82,000 KRW for YG Entertainment on the 15th. This is based on the expectation that MD sales will significantly increase due to BLACKPINK's upcoming comeback and their entry into Weverse.

Sales and operating profit for the third quarter are projected to reach 101 billion KRW and 16 billion KRW, respectively, representing increases of 54% and 345% compared to the same period last year. The operating profit exceeds market expectations by 42%, reflecting not only strong core business performance but also investment gains of 7 billion KRW from YG Investment's stake in Maxst, a subsidiary. BLACKPINK member Lisa's solo activities also remained solid. Lisa's album sales reached 860,000 copies, bringing total sales to 880,000 copies. Due to the Weverse entry and Lisa's solo activities, MD sales are expected to record 16.6 billion KRW, an 80% increase from the same period last year.

The growth of YG Plus is also noteworthy. Amid rapid growth this year driven by expanded distribution of albums and digital music, investment gains from YG Investment were added in the third quarter. Since the second quarter, YG Plus has started distributing HYBE's domestic albums and digital music, and with the release of BTS and TXT albums in the third quarter, HYBE's album sales hit a yearly high, which is expected to increase YG Plus's distribution commission income. Accordingly, consolidated music service sales for YG are predicted to rise 60% from 41.1 billion KRW last year to 66 billion KRW this year, boosted by strong YG album sales and HYBE's addition. Ha-kyung Park, a researcher at Korea Investment & Securities, explained, "In the fourth quarter, BLACKPINK's full group comeback will strengthen the MD lineup. With expanded sales channels through Weverse, MD sales are also expected to increase significantly."

BLACKPINK has broken the stereotype that girl groups earn less than boy groups. Typically, girl group album sales range from 300,000 to 500,000 copies, but BLACKPINK sold 1.3 million copies of their full group album last year, becoming the only girl group to achieve million-seller status. This year, their solo albums have also recorded sales exceeding 600,000 to 800,000 copies.

By securing a global fandom, they have achieved album sales comparable to boy groups, and with concerts expected to resume next year, their profit contribution is projected to grow further. Researcher Ha-kyung Park stated, "This year, entry into Weverse expanded MD sales channels, and leveraging this, MD sales are expected to grow 30% year-over-year to 77 billion KRW next year. The increase in highly profitable MD sales will also improve next year's operating profit margin by 1.3 percentage points compared to this year."