April 20, 2024

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[THE INVESTOR] YG Entertainment has been slower than expected in the first quarter, said Mirae Asset Daewoo on April 14, lowering the target price 6.8 percent to 30,000 won (US$28.15).

Its operating profit in the period plunged 84.4 percent on-year to 2.3 billion won and revenue 27.7 percent to 77.3 billion won, the company reported on May 11.

Big Bang’s last concert tour before joining the military service was reflected but the initial results from producing new entertainment programs was unsatisfactory. t will take more time than expected for contents business to begin contributing to profits, as it has suffered close to 8 billion won loss from producing two programs including “Mix Nine” in the previous two quarters, said analyst Park Jeong-yeop. 

Although the absence of Big Bang from second quarter will inevitably hurt its revenue, the growth of its next-generation lineup including Winner, iKON and Black Pink is fairly strong, according to Park who estimated that the combined sales of concert tickets in Japan this year will be approximately 37 percent of Big Bang’s 1.44 million last year. 

Investors should keep their eyes on the possibility of profits improvement, subsidiary’s loss decline and normalizing relationship with China, said the analyst maintaining a “trading buy” recommendation. 

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