Eugene Investment & Securities has trimmed its target price for YG Entertainment (KOSPI: 122870) by 19.2%, from ₩78,000 to ₩63,000, while maintaining its buy recommendation.
Analyst Lee Hyun-ji projects second-quarter revenue of ₩110.1bn, up 9.7% year on year, with operating profit of ₩8.5bn, a modest 1.8% increase. Album sales from comebacks by Babymonster and Treasure are expected to drive top-line growth, but upfront production costs will weigh on margins, leaving results likely to fall short of market consensus.
The third quarter is where the real momentum lies. Big Bang's world tour, marking the veteran group's 20th anniversary, is the centrepiece. The 32 concerts announced so far are all stadium-scale events. Based on the second-half schedule alone, attendance is expected to reach at least 1.2m; adding further dates planned for the first half of next year could push the total audience to as many as 2m.
Contributing to the same period, Treasure's fan-meeting events in Japan and Babymonster's own world tour will begin to feed meaningfully into results from the third quarter. Notably, Babymonster's second world tour will focus on western markets the group has not previously targeted, broadening its fanbase beyond Asia. Combined merchandise revenue in the second half is forecast at around ₩59bn.
For the full year, Eugene Investment projects revenue of ₩608bn, up 11.6%, and operating profit of ₩74bn, up 3.1%. The target price is based on a price-to-earnings multiple of 20 times. At the current share price of ₩40,500, the implied upside is 55.6%. The label also plans to debut a new boy group before the year is out.