"Once Called a History-Changing Group"... Rise of Cortis Spurs Revaluation of Entertainment Stocks [Weekend Money]

"Correction Sharper Than Expected"
Hana Securities Recommends Increasing Holdings

There is an opinion that entertainment-related stocks, which are expected to generally meet market expectations in their second quarter earnings, are significantly undervalued.

Lee Kihoon, a researcher at Hana Securities, stated, "Since the price adjustment has been sharper than the previously expected adjustment period, I recommend increasing allocations," adding, "Current stock prices are at around 22 times earnings for HYBE and 12 to 15 times for SM, JYP Entertainment, and YG Entertainment, indicating a significant undervaluation."

Cortis. Screenshot from Cortis SNS.

Cats Eye.

Lee explained that although entertainment-related stocks have been quite sluggish recently due to factors such as capital flows focused on artificial intelligence (AI), second quarter earnings are generally expected to be in line with consensus. He added that even companies currently underperforming are anticipated to have strong performance momentum in the second half of the year. He continued, "5th generation groups like Cortis and Cats Eye are growing at a pace that is changing history, which is expected to have a positive impact on the growth of competing groups as well."

In the short term, resolving undervaluation hinges on HYBE's second quarter results, particularly given concerns over BTS’s revenue sharing ratio. Lee emphasized that based on accumulated tour sales in April and May, HYBE is likely to meet high expectations. He noted, "5th generation groups are growing rapidly, and Seventeen is addressing military service issues so that eight members can be active from the second quarter of next year." He added, "If HYBE rebounds, other entertainment agencies will also rise together."

He projected HYBE’s second quarter operating profit at 144.5 billion won, a 119% year-on-year increase. SM’s operating profit is expected to reach 53.8 billion won, up 13%. Lee noted, "HYBE is expected to achieve record-breaking results thanks to BTS’s historic world tour, and SM is also expected to post strong results as NCT Wish, Riize, and aespa are all making comebacks." While JYP and YG are somewhat sluggish, Lee explained that JYP is expected to achieve record results in the second half due to the comeback and large-scale tour of Stray Kids, and YG is preparing for BIGBANG’s 20th anniversary tour from August as well as the debut of a new male rookie group within the year.

This content was produced with the assistance of AI translation services.