KB Securities diagnoses YG Entertainment as needing to shift its focus from BLACKPINK’s re-contracting to fundamental strength
KB Securities analyst Lee Sun Hwa stated, “With BLACKPINK’s world tour expanding their global fandom, their intellectual property (IP) value has increased, leading to indirect revenue growth even without direct activities. In addition to BLACKPINK, as TREASURE, in their 4th year since debut, begins to expand its global fandom, and with BABYMONSTER set to debut in the 4th quarter of 2023, YG artist pipeline is expected to grow.”
The analyst said, “There are concerns in the market about BLACKPINK’s contract renewal and exclusive contract fees. However, considering the rise in IP value of the next-generation artists, it is estimated that the intangible asset amortization expenses associated with BLACKPINK’s re-contract may not be burdensome.”
She further added, “In the second quarter of last year, when BLACKPINK had no significant activities, the operating profit was 9.3 billion KRW. This means that even without BLACKPINK, there was a potential profit of approximately 10 billion KRW per quarter for YG. Instead of worrying about contract fees, it is necessary to focus on the improved fundamental strength.”
She continued, “With expectations of expanded activities for TREASURE, BABYMONSTER, and others, we are raising YG’s earnings estimates and increasing the target stock price by 14%.”
Meanwhile, as of 11:32 AM KST on the same day in the stock market, YG Entertainment is trading at 85,000 KRW, up 0.25% from the previous day. At the same time, the KOSDAQ index is recording a 0.68% decline at 877.85.
