[Click eStock] "Rising Expectations for YG Entertainment"

Blackpink Returns: Major Concerts Set for the Second Half
Active Shift in MD Strategy Shows Results
Rising Expectations for Rookies Like Babymonster

YG Entertainment's performance is expected to improve significantly. The company anticipates a larger-than-expected audience turnout for Blackpink's concerts in the second half of the year, in addition to an expanding momentum from its rookie artists.

On June 2, Daishin Securities maintained its 'Buy' rating on YG Entertainment and raised its target price by 20% to 110,000 won. The previous trading day's closing price was 81,000 won.

The three pillars driving performance improvement were identified as Blackpink, changes in the MD (merchandising) strategy, and rookie momentum. For Blackpink, the announcement of the second-half concert schedule has already surpassed the market expectation of 1.8 million attendees, which was considered the maximum possible audience. Lim Sujin, a researcher at Daishin Securities, projected, "There is a high possibility that additional schedules and encore concerts will be added in the first quarter of next year. If this happens, the cumulative audience figure will exceed the previous estimate of 2.5 million." The expected sales volume of Blackpink's new physical album, to be released during the concert period, is also projected to reach 2 million copies.

MD was highlighted as a core business segment that will drive future performance improvement. YG Entertainment is shifting away from its previously conservative MD strategy by actively operating city-specific pop-up stores, diversifying product categories, and expanding offerings for light fans. The company expects to maximize the impact of this MD strategy during periods when Blackpink is active as a full group.

Rookie artists are also seen as potential growth drivers. Babymonster is already showing stronger-than-expected growth. The group will announce a mini-album release and a large-scale world tour in the second half of the year. A new boy group is scheduled to debut in 2026, and a new girl group in 2027. Analysts believe that the company's dependence on specific artists, which has been a factor in the stock's discount, will be alleviated in the mid- to long-term.

Daishin Securities forecasted that YG Entertainment's second-quarter results may be somewhat sluggish, but expectations will rise in the second half of the year. On a consolidated basis, sales are projected at 101.7 billion won and operating profit at 4.6 billion won, representing decreases of 3.8% and 51.7%, respectively, compared to the previous quarter. However, these figures exceed market consensus. Compared to the same period last year, sales are expected to increase by 14.7%, and the operating loss is projected to turn into a profit.

Researcher Lim explained, "Second-quarter results are expected to decline compared to the previous quarter due to a gap in album releases, but aside from the deferred recognition of about 1.3 billion won in unrecognized costs from the first quarter, there are no major variables." She added, "In the second half of the year, as the activities of major artists such as Blackpink, Babymonster, and Treasure become full-fledged, YG Entertainment will enter a period of performance rebound."