[Click eStock] "JYP Entertainment, Focus on A2K Project This Year"

Hana Securities Report

Hana Securities maintained a buy rating on JYP Entertainment on the 27th and raised the target price by 11% to 91,000 KRW.

[Image source=Yonhap News]

Lee Ki-hoon, a researcher at Hana Securities, said, "Despite weak earnings in the fourth quarter, profits are expected to be revised upward solely due to the surprise in album and management sales from TWICE," adding, "The A2K project is underway, and if successful, it will be a powerful momentum that could completely change estimates and valuations."

Fourth-quarter sales and operating profit grew 81% and 58% year-on-year to 115.2 billion KRW and 25.7 billion KRW, respectively. However, operating profit fell significantly short of the market expectation of 31 billion KRW. Record-breaking album sales of 4.76 million copies due to Stray Kids and ITZY comebacks, 8.3 billion KRW in settlements to Republic Records, and record-high sales of 17.1 billion KRW were reflected, but a one-time cost of 6 billion KRW occurred due to TWICE's contract renewal and combined royalties from NiziU, resulting in underperformance.

In the first quarter, sales and operating profit are expected to increase 60% and 38% year-on-year to 108.6 billion KRW and 26.5 billion KRW, respectively, reflecting TWICE's 1.7 million pre-orders, NMIXX's comeback, and 18 shows of Stray Kids' world tour.

In the second half of this year, three teams will debut: Korean male, Chinese male, and American female groups, with the biggest momentum being the debut of the American female rookie group under the A2K project. HYBE is preparing this project with Geffen Records, and JYP is collaborating with Republic Records. The integration of K-pop casting and training programs along with secondary rights monetization is expected to create steep synergies.

Researcher Lee Ki-hoon said, "If successful, sales of over 500 billion KRW per group are possible," adding, "Although not yet reflected in profit forecasts due to lack of concrete details, an audition program is expected to be broadcast on an online platform as early as the end of April."