November 23, 2024

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[THE INVESTOR] K-pop powerhouses SM Entertainment, JYP Entertainment and YG Entertainment enjoyed a sharp rise in their share price on better-than-expected earnings results combined with upbeat analyst forecasts. 

On Aug. 16, shares of JYP -- home to entertainers like Twice, 2PM and Suzy -- surged 8.21 percent to close at 25,700 won (US$22.79). Big Bang’s label YG rose 7.05 percent to 37,100 won, while SM enjoyed a 6.3 percent increase to 43,800 won 

Earlier this week, the labels announced their second-quarter performance report. JYP posted sales of 31.6 billion won, up 10.6 percent on-year, and record operating profit of 9.1 billion won, up 30.9 percent on-year, beating market expectation by 20 percent. The stellar performance is largely due to the return of its popular girl group Twice and its Asia tour. 

Twice

Investors are hopeful that JYP shares will rise even further this year as Twice’s activities will be in full throttle, in addition to the September debut of the label’s much-anticipated new boy group in China called Boy Story. 

“JYP has consecutively raised earnings by 20 percent in the past three quarters to break the record this time,” said Lee Ki-hoon, analyst at Hana Financial Investment. “We project JYP to expand earnings in the second half of this year and continue the growth in 2019 as well.”

SM posted 124.4 billion won in sales from April to June, up 83.8 percent on-year, and operating profit of 10 billion won, up 626.2 percent. 

“SM’s artists have been active both at home and abroad, with 82.4 percent growth in revenue in international music sales,” said Park Jeong-yeop, analyst at Mirae Asset Daewoo. “In the latter half, the agency is expected to have strong earnings and growth momentum, with EXO and Red Velvet’s album releases and planned Japanese tour, in addition to NCT’s Chinese team’s debut. 

As for YG, the label’s profit was down 68 percent on-year to 1.4 billion won, but it was no surprise as investors were already expecting it. YG’s cash cow Big Bang has temporarily halted group activities as its members joined the mandatory military service. Meanwhile, its affiliate YG Plus turned to black, giving an additional boost to the earnings. 

Analysts expect YG’s rookie group Black Pink will lift earnings of the agency in the rest of the year. “In the third quarter, YG is expected to see record music sales coming to 17 billion won when Black Pink’s activities are fully reflected,” Ji In-hae, analyst from Hanwha Investment & Securities.

On Aug. 17, shares of JYP closed at 26,400 won, while SM came to 43,800 won and YG at 37,050 won.

By Ahn Sung-mi (sahn@heraldcorp.com)