[Asia Economy Reporter Kwon Jaehee] As the government hints at the possibility of a full transition to a new quarantine system, including removing masks outdoors in two weeks, expectations for 'reopening' are growing. Amid this, stocks related to performances and similar sectors are showing a clear upward trend, while cosmetics-related stocks continue to struggle due to impacts such as lockdowns in China despite the reopening.
The progress of entertainment stocks, which have strong fandoms, stands out with the anticipation of performance resumptions. A representative stock is HYBE. Hyundai Motor Securities has given HYBE a 'Buy' rating with a target price of 400,000 KRW. Samsung Securities also gave HYBE a 'Buy' rating with a target price of 440,000 KRW. This is due to growing expectations for performance resumptions driven by the reopening.
BTS, under HYBE, is expected to attract a total of 310,000 attendees through seven performances in Korea and the United States during March and April alone. Ticket prices are estimated to be around 150,000 to 200,000 KRW, maintaining a premium of 50-100% compared to the average K-pop artist.
Hyundai Motor Securities analyst Kim Hyunyong stated, "Including the performances HYBE plans for the second half of the year, HYBE's total audience for this year is expected to reach 1.05 million, more than five times that of the previous year, capturing a 44% market share."
JYP is also attracting attention due to its strong fandom and expectations for performance resumptions. Samsung Securities upgraded JYP's target price by 14% to 72,000 KRW with a 'Buy' rating.
Samsung Securities analyst Choi Minha analyzed, "During the COVID-19 pandemic, fandoms of artists like TWICE expanded further, so performance revenues are expected to be larger than before."
However, some stocks are not smiling despite the reopening. These include cosmetics-related stocks closely linked to China, such as LG Household & Health Care and Amorepacific.
Hyundai Motor Securities maintained a 'Buy' rating on LG Household & Health Care but lowered the target price from 1,300,000 KRW to 1,250,000 KRW. This is due to the slowdown in Chinese consumption and strengthened quarantine measures such as lockdowns, which have hit offline channels, along with continued declines in duty-free store sales, leading to expected margin contraction in the cosmetics division in Q1.
Hyundai Motor Securities analyst Jung Hyejin explained, "Although the Chinese market was expected to recover distribution traffic from March after the Olympics in January and February, traffic restrictions due to strengthened quarantine measures in major first-tier cities are expected to slow growth in local offline cosmetics sales. We need to consider the possibility that the heightened local quarantine level will continue through Q2."
Amorepacific is also expected to face unavoidable impacts from China. Daishin Securities gave Amorepacific a 'Market Perform' rating but lowered the target price by 16% to 160,000 KRW.
Daishin Securities analyst Han Yujeong forecasted, "Demand for China is expected to shrink due to the resurgence of COVID-19 within China."
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