IBK Investment & Securities: "Cube Entertainment, the Biggest Beneficiary of the Lifting of the Han-Han Restriction"

IBK Investment & Securities evaluated Cube Entertainment as "the biggest beneficiary of the lifting of the China ban on Korean entertainment."

On the 2nd, IBK Investment & Securities stated in a report on Cube Entertainment, "The consolidated revenue for Q4 2022 is expected to increase by 115.9% year-on-year to 41 billion KRW, and operating profit is projected to turn positive at 2.7 billion KRW."

IBK mentioned, "The strong performance in the entertainment business segment, driven by the global fandom expansion of the main artist IP, (G)I-DLE, is estimated to have led the overall improvement in company performance."

Along with direct sales from albums, music, performances, and advertisements, there was also an increase in sales of secondary IP-related products with high profit contribution, such as content on YouTube.

When excluding the impact of increased costs in the cosmetics distribution segment (advertising, marketing, etc.), a clear improvement in operating margin is also interpreted.

The growth of the representative artist IP, (G)I-DLE, is expected to continue this year as well. Album sales trends show quantitative growth with 150,000 copies for Mini Album 3 in 2020, 202,000 copies for Mini Album 4 in 2021, 254,000 copies for the first full album (March) in 2022, and 839,000 copies for Mini Album 5 (October).

For the first full album, qualitative growth is also considered to accompany the sales, as 14.2% of total album sales occurred after three months of release, strengthening the global core fandom.

IBK said, "Following the release of a new album scheduled for April to May this year, it is expected to become a million-seller IP," and added, "In particular, with recent resolutions of Korea-China conflicts over visas, direct benefits from the lifting of the China ban on Korean entertainment will continue."

Currently, advertising contracts centered around Chinese member Yuqi are continuously increasing. Additionally, the launch of new IPs this year (one boy group and one girl group) is planned, and IBK expects mid- to long-term growth potential through portfolio diversification.

IBK projected Cube Entertainment's annual expected revenue for this year at 166 billion KRW, a 37.6% increase from the previous year, and operating profit at 18.8 billion KRW, a 171.4% increase.