TWICE and Stray Kids... JYP Entertainment Poised for Strong Momentum Next Year [Click e-Stock]

TWICE Surpasses Expectations with "K-Pop Demon Hunters" Effect
NMIXX Satisfies Demand for Rookie Group Growth

JYP Entertainment, which posted sluggish results in the third quarter of this year due to high cost-related expenses, is now analyzed to have more robust growth drivers than expected for next year. With strong performances from TWICE, NMIXX, and Stray Kids, the company is projected to see improved earnings.

On November 13, Hana Securities maintained its target price for JYP Entertainment at 95,000 won and its "Buy" investment rating, citing these factors. The previous day's closing price was 71,900 won.

In the third quarter of this year, the company posted disappointing results. Revenue reached 232.6 billion won, a 37% increase year-on-year, but operating profit fell 16% over the same period to 40.8 billion won. Despite record-high sales, profits dropped sharply. This figure is significantly below the market consensus of 51.7 billion won.

It is assessed that cost-related expenses were somewhat high due to the rebranding of Girlset, the release of two 2PM albums, and expanded investments in the Chinese boy group and Init Entertainment (Youngbin). The company recorded its lowest gross profit margin (33.2%) since 2018, but this is considered a one-off expense. Excluding this, the operating margin hovered around 20% even during simultaneous activities by Stray Kids and TWICE.

In terms of album sales, more than 5.5 million copies were sold thanks to the comebacks of Stray Kids and TWICE. Concerts by these two groups also generated record-high revenue. Performance fees, including ITZY and NMIXX's domestic fan meetings and TWICE's appearances at major festivals, also reached an all-time high. However, merchandise (MD) sales fell 21% year-on-year to 40 billion won.

The company is expected to have abundant growth drivers next year. While this year saw expectations for record results from Stray Kids' first-ever large-scale world tour, it was anticipated that growth momentum would be limited going forward due to slowing growth from TWICE, stagnant profit margins following Stray Kids' contract renewal, and underperformance by rookie idol groups.

However, TWICE rose to No. 50 on the Billboard HOT100 for the first time, benefiting from the K-Pop Demon Hunters OST. Reflecting this, 35 out of 73 recently announced world tour dates have been allocated to North America, with the possibility of additional dates. The proportion per region is similar to that of BTS. If Japanese stadium dates are added, the first single tour is expected to attract 2 million attendees.

Lee Kihun, a researcher at Hana Securities, explained, "The lack of rookie group growth compared to other agencies was resolved as NMIXX achieved its first No. 1 digital single since debut. Stray Kids are also expected to hold more tours, and Blue Garage has recovered its profit margin to around 10%."