[Click eStock] YG Entertainment, Q2 Earnings Disappoint... Target Price Lowered to 56,000 KRW

Kiwoom Securities lowered the target price for YG Entertainment from 69,000 KRW to 56,000 KRW on the 12th, considering the worsened first-half performance. However, it maintained a 'Buy' investment rating, expecting performance improvement from the fourth quarter of this year.

Namsoo Lee, a researcher at Kiwoom Securities, stated in the report, "Operating losses of 7 billion KRW and 11 billion KRW were recorded in the first and second quarters, respectively. With sales around 90 billion KRW, considering the losses, the breakeven point is quarterly sales of 100 billion KRW," adding, "Therefore, we judge that a performance rebound will be difficult until the third quarter, considering intellectual property (IP) activities."

YG Entertainment recorded sales of 90 billion KRW and an operating loss of 10.9 billion KRW in the second quarter (previous quarter). The researcher explained, "Amid sluggish sales, there were also cost issues such as investment expenses for IP growth including Baby Monster's debut and album release, intangible asset amortization expenses, and litigation provisions related to BLACKPINK's world tour."

From the fourth quarter of this year, performance improvement is expected due to album comebacks and concert expansions. The researcher said, "Especially in 2025, we expect maximum concert revenue from four concert IP teams (BLACKPINK, TREASURE, 2NE1, Baby Monster)," adding, "The investment expenses spent on Baby Monster are also expected to contribute to monetization through increased album sales and concert hosting."