Expected to Enjoy Brisk Earnings Growth Momentum
The author is an analyst of NH Investment & Securities. She can be reached at hzl.lee@nhqv.com. -- Ed.
We present a Buy rating and TP of W55,000 on YG Entertainment (YG Ent).
In 2021, we expect the firm to enjoy brisk earnings growth momentum, driven by its two major groups (Big Bang and BLACKPINK) and newcomer Treasure.
Big Bang and BLACKPINK plan to restart global dome tours once Covid-19 eases, with BLACKPINK likely to hold a US arena tour.
Meanwhile, having Japanese members, Treasure boasts high awareness in Japan. The group has released three albums thus far, with pre-orders from Japan proving strong. The group’s hit song BOY has ranked first on the LINE Music Japan chart.
According to recent media reports, Big Bang’s G-Dragon may be preparing for a solo comeback. While the comeback is unlikely to be made before 2021, we expect related effects to be fully reflected in YG Ent’s 2021 earnings.
We note that Big Bang boasts strong awareness in China. Once government restrictions on Korean content ease in earnest, the group should generate improved ad sales and conduct dome tours in China.
Given that YG Ent has been engaging in merchandise (Merchbar) and content (Netflix) businesses via BLACKPINK, we see further room for expansion in those arenas via utilization of Big Bang IP.