[Click eStock] "JYP Entertainment, Profitability Recovery Expected in Second Half... Target Price Down"

Target Price Adjusted Downward by 5% Compared to Previous Level

NH Investment & Securities forecasted on the 27th that JYP Ent. (hereinafter JYP Entertainment) will show visible profitability recovery as the second half of the year progresses. The target stock price was lowered from 100,000 KRW to 95,000 KRW, while maintaining a 'Buy' investment rating.

Researcher Lee Hwajeong of NH Investment & Securities stated, "Considering that the resumption of Stray Kids' activities has been delayed to July compared to the previous expectation, we reduced the annual activity assumptions (new release revenue), resulting in a 5% downward adjustment of the target stock price," adding, "Since there have been consistent signals of new fandom inflow after the previous activities, the initial sales volume per new release is expected to at least maintain the previous level (3.7 million copies)."

Amid a slowdown in overall artist album sales growth and an increase in operating expenses related to new businesses, market concerns about profitability deterioration have expanded. The researcher said, "With Stray Kids' comeback confirmed for mid-July and a large-scale world tour planned, visible profitability recovery is expected as the second half progresses," and added, "Current stock prices excessively reflect concerns related to profitability, making this a valid zone for bottom fishing (buying at the low point)."

He expressed the opinion that the slowdown in album sales growth should not be broadly interpreted as an industry peak-out (a slowdown after reaching a peak). The researcher analyzed, "Stray Kids' new song released in May entered the Billboard main song chart Hot 100 at position 90," and "The second half world tour is also expanding to an unprecedented scale, with performances expected in over 40 cities including Western regions, so the growth in performance centered on music and concerts is just beginning."

Second-quarter earnings are expected to fall short of market expectations. The researcher explained, "JYP Entertainment's second-quarter earnings are expected to record sales of 94.7 billion KRW, down 38% year-on-year, and operating profit of 22.3 billion KRW, down 51%, falling short of consensus (average securities firm forecasts)," adding, "This is because there are no significant activities excluding Nayeon's solo and ITZY's world tour, and initial costs related to the debut of NEXZ (boy group) are expected."