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The Korea Herald
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THE INVESTOR
March 28, 2024

Stocks & Bonds

[EQUITIES] ‘YG Entertainment needs time to improve’

  • PUBLISHED :February 23, 2017 - 14:46
  • UPDATED :February 23, 2017 - 14:46
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[THE INVESTOR] YG Entertainment will need more time until its earnings improve, said Hana Financial Investment on Feb. 23, lowering the target price to 33,000 won (US$28.95) from 35,000 won.




The cosmetics division, which accounts for 90 percent of its loss, is affected by the THAAD deployment and its CEO has been replaced, said analyst Lee Gi-hun, adjusting the estimated operating loss to 4.2 billion won from 400 million won. 

The company lacks mid- to long-term momentum as a member of Big Bang, one of the most successful K-pop groups in the agency, went to serve in the army and YG Plus is underperforming, pointed out the analyst. Lee maintained a “buy” recommendation, adding that iKON and Winner’s albums, to be released in March and April, are crucial and could be an opportunity to return to an upcycle.

HMC Investment Securities agreed that YG Entertainment had been slow in the fourth quarter of last year, lowering the target price to 33,500 won from 38,000 won. 

The decline in new music releases slowed down the revenue growth in the online Chinese market, said analyst Yu Seong-man, and its cosmetics sales suffered over 3 billion won operating loss in the period and will not recover for the time being. 

Its stock price has been dragged down by the slow industry and worsening investor sentiments, and only when the relationship with China recovers will its earnings be able to rebound and expansion in China be possible, added the analyst. 

By Hwang You-mee (glamazon@heraldcorp.com)

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