[Click eStock] "JYP Entertainment, Profitability Expansion... Target Price Up"

[Asia Economy Reporter Hwang Yoon-joo] Mirae Asset Securities expects JYP Entertainment to expand its profit-generating capacity through overseas markets. Accordingly, it maintained a 'Buy' investment rating while raising the target price to 85,000 KRW.

According to the financial investment industry on the 18th, Song Beom-yong, a researcher at Mirae Asset Securities, stated in a report released the previous day, "This year's sales are expected to increase by 59% year-on-year to 309.3 billion KRW, and operating profit is expected to grow by 70% to 98.4 billion KRW."

Researcher Song explained, "This year's sales will be revised upward by 1% compared to the previous estimate, reflecting the four SKZ's June concerts in Japan to be recognized in the third quarter and the successful case of TWICE's unit (estimated 400,000 copies vs. actual 600,000 copies)."

TWICE Mina / Photo by Yonhap News

Through the second-quarter performance, the expansion of agreements with overseas promoters and a high leverage effect were confirmed, leading to an upward revision of the expected operating profit margin by 4 percentage points in 2022 and 2 percentage points in 2023, respectively.

Researcher Song analyzed, "The operating profit of 98.4 billion KRW this year exceeds the consensus by +10%, and it is judged that the achievement of estimates is possible as the expansion of overseas activities with high profit contribution is likely due to the growth of the global fandom."

He explained, "Four rookie groups are scheduled to debut by 2023, and the effect of launching the company's MD mall (JYP360) is expected to be in full swing. Reflecting the upward revision of expected sales and margin improvement for 2022 and 2023, the target price was raised by 8%."

He added, "The momentum for stock price increase is high due to the growth and profit contribution of rookie groups (not reflected in estimates)."