[Click eStock] "JYP Entertainment Expected to Achieve Annual Operating Profit of 100 Billion Won"

Yuanta Securities Report

[Image source=Yonhap News]

[Asia Economy Reporter Minji Lee] Yuanta Securities maintained a buy rating and a target price of 84,000 KRW for JYP Ent. on the 17th.

In the second quarter, JYP Ent. recorded sales of 67.8 billion KRW and operating profit of 24.3 billion KRW, representing growth of 67% and 27% respectively compared to the same period last year. The operating profit exceeded market expectations of 18.2 billion KRW by more than 33%.

Sales from the album and digital music segments reached 29.4 billion KRW, growing 13% year-on-year. According to Gaon Chart shipment data, domestic album sales (18.6 billion KRW) amounted to 1.23 million copies. This was due to the recognition of about 600,000 copies of Nayeon's first mini album and increased sales of overseas-focused group albums. Digital music sales grew 18% year-on-year to 10.8 billion KRW. Overseas digital music sales recorded 8.9 billion KRW, a 31% increase from the same period last year, marking the highest quarterly sales ever. Republic Records album sales settlements also reached a quarterly record high of 5 billion KRW.

The management division recorded sales of 16.5 billion KRW, a 13% increase compared to the same period last year. This included two encore concerts in North America by TWICE, three dome concerts in Japan, and four concerts by Stray Kids in Korea and North America. TWICE's three concerts in Japan contributed approximately 6.7 billion KRW in sales, generating about 2.2 billion KRW in revenue per show. The company's recognized settlement ratio from total ticket sales appears to be in the high 30% range. The two North American encore concerts were conducted based on increased guarantees compared to the first quarter's North American shows. Sales related to Stray Kids' four concerts in Japan were postponed to the third quarter.

The company's gross profit margin improved significantly to 55.3% compared to the previous quarter. This was due to an increased proportion of sales from activities in Japan and other overseas content regions. The operating profit margin rose by 7.5 percentage points from the previous quarter to 35.8%. Despite reflecting a bonus payment of 4.5 billion KRW, a solid operating profit margin was maintained.

Researcher Hyein Lee of Yuanta Securities said, "With album releases and concerts scheduled for the second half of the year, operating profit is expected to increase by 36% compared to the first half, reaching 58.9 billion KRW," adding, "With all company-affiliated artists active in the second half, annual operating profit could achieve 100 billion KRW."