[Click e-Stock] "BIGBANG World Tour Now in Full Swing," but YG Target Price Slightly Lowered

On September 9, LS Securities revised its target price for YG Entertainment downward from 69,000 won to 62,000 won. This adjustment reflects the deterioration in overall investor sentiment in the entertainment sector and concerns over BLACKPINK’s potential hiatus, despite BIGBANG ramping up its world tour. However, the brokerage maintained its “Buy” investment rating, citing the rapid growth of YG’s newer artists.

Park Sungho, a research analyst at LS Securities, stated in an analysis report on YG Entertainment released the same day, "We have revised the multiples downward to account for the recent broad deterioration in investor sentiment towards the entertainment sector and concerns about a hiatus for major IPs." The new target price suggests an additional upside of about 47% compared to that day's closing price of 42,100 won.

Despite lowering the target price, Park emphasized that the rapid growth of YG Entertainment’s newer IPs is a key investment point. He noted, "Although YG’s artist lineup is smaller than that of its competitors, the growth rate of its newer IPs is among the fastest in the industry. In the second quarter, most results were driven by BABYMONSTER’s activity, even without a comeback by major IPs. This quarter, revenue and operating profit each increased by 22.7% and 31.2% year-on-year, based solely on the activities of BABYMONSTER and TREASURE."

He also pointed out, "It is positive that newer IPs are offsetting the hiatus of major IPs and driving earnings growth. In the remaining second half of the year, the debut of a new boy group is expected to partially offset downtime from the conclusion of existing major IP activities."

In addition, BIGBANG’s comeback activities were in full swing starting in the second half of the year. Since August, the group has announced a stadium tour with 33 concerts in 19 cities, beginning in Goyang. Park noted, "Expected ticket sales should exceed 1.4 million. Even as a legacy IP now celebrating its 20th anniversary, the fact that a massive global tour is possible proves the group’s powerful fandom and IP strength. With recent results from advanced merchandising and IP licensing businesses being confirmed in earnings, BIGBANG’s comeback is expected to not only boost performance revenue but also drive significant results for the MD and license businesses."

This year’s consolidated revenues are estimated at 627.4 billion won, with operating profit forecast at 78.9 billion won. Park explained, "The high comparison base created by BLACKPINK’s large-scale stadium tour last year is expected to be alleviated from the fourth quarter onward." However, despite global tours by BIGBANG and others, profitability in the second half is projected to decline somewhat. While there will be a leverage effect from the large-scale tours, due to the nature of legacy IP activities, a higher settlement rate will be applied, resulting in lower profitability compared to previous tours.

Park concluded, "Despite the steep growth of newer IPs, it will be difficult for this to be fully reflected in second-half results due to the high comparison base, so a proper rebound in share price is more likely to appear after the end of the year."

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