The Hidden Cash Cow Behind Girl Groups... The 'Pillar Business' Supporting JYP Amid Stock Crisis [Click e Stock]

LS Securities Lowers Target Price from 74,000 Won to 62,000 Won

The stock price of JYP Entertainment has been struggling. Although the MD (merchandising) business is growing and intellectual property (IP) continues to perform strongly, there is seen to be a lack of confidence in the next-generation IP, which explains the sluggish performance.

On September 10, LS Securities maintained its 'Buy' rating on JYP Entertainment but lowered its target price by 16.2% to 62,000 won. The previous day's closing price was 38,850 won. This adjustment reflects a deterioration in investor sentiment across the entertainment sector, risks related to long-running IP, and uncertainty over the performance of newer IPs.

Park Sungho, an analyst at LS Securities, said, "We have revised the target price-earnings ratio (PER) to 17 times to factor in the recently highlighted re-contracting risks for mature IP. While the resumption of Stray Kids' activities has eased short-term performance concerns, other uncertainties remain in place."

Previously, in 2022, all TWICE members renewed their contracts with JYP Entertainment. Stray Kids also completed early contract renewals ahead of their contract expiration in 2024. The securities industry is raising questions about the future group activities and comeback cycle of TWICE, and whether growth in newer, less-established IPs can fill the performance gap once Stray Kids' impact subsides.

Expectations for earnings have also been lowered. LS Securities projects JYP Entertainment's consolidated sales for this year at 826.2 billion won, up just 0.5% from the previous year, while operating profit is forecast to drop 3.9% to 149.2 billion won. The high base created by Stray Kids' large-scale stadium tour in the second half of last year is seen as a burden, and new debut costs incurred by subsidiary INIT Entertainment are also expected to be reflected in the third quarter.

Nonetheless, the IP business remains a pillar of support. In the first half of the year, TWICE's world tour and city-linked pop-up stores delivered solid results, with about 20% of world tour MD sales generated through pop-up stores. In the second half, as Stray Kids' world tour ramps up, further growth in MD sales is anticipated.

The character IP business is also expanding. In the first half of the year, JYP Entertainment launched global pop-up stores leveraging TWICE and Stray Kids character IP. The company plans to expand these stores to more global markets in line with world tour schedules in the second half. The recent partnership with China's IP commerce platform Xiaomang is also seen as a driver for strengthening local MD sales and distribution capabilities.

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