Fandom Business in Full Swing
The author is an analyst of NH Investment & Securities. She can be reached at hzl.lee@nhqv.com. -- Ed.
We raise our TP on YG Ent to W71,000, noting the firm’s mid/long-term momentum from both the resumption of offline concerts and full-fledged growth at the fandom business. Despite an absence of activity in 2Q21, we expect to witness strengthened sales. Also positive for YG Ent’s share price are Blackpink’s comeback and Weverse account launch in 2H21.
Fandom business in full swing upon re-opening
We raise our TP on YG Ent by 15% to W71,000. Our new TP is based on 12M FWD NP (excluding minority interests) (vs 2021E NP previously) and reflects full-fledged fandom sales owing to the Weverse collaboration.
We maintain a Buy rating on YG Ent, a company that boasts strong upside from both re-opening and its fandom business. Upon the resumption of offline concerts, the firm should benefit from: 1) expanded concert volume (price per session, number of sessions) thanks to Blackpink’s heightened global recognition; 2) the initiation of Treasure concerts amid their growing popularity in Japan; and 3) the resumption of Japanese dome tours upon Big Bang’s comeback. Spurred by the fandom business, merchandise sales should also display meaningful growth once offline concerts resume. We also positively view the planned expansion of the company’s artist lineup from the scheduled debut of a new girl group in early 2022.
2H21 events: 1) Blackpink’s comeback; and 2) Blackpink’s Weverse account launch
In 2H21, in addition to launching on the Weverse platform, Blackpink will have two comebacks (a Lisa solo comeback in collaboration with DJ Snake, and a full-group comeback). Considering Blackpink’s last online concert ticket sales, the number of fans that can be converted to paying users is estimated at 200,000~250,000. Worth noting is the rise in fandom sales (merchandise, content, online concert) in line with the Weverse collaboration.
2Q21 preview: Reconfirming heightened fundamental strength
On a consolidated basis, we estimate YG Ent’s 2Q21 sales at W64.7bn (+21% y-y) and OP at W4.3bn (+59% y-y), in line with consensus.
Parent: Earnings will inevitably slow q-q due to an absence of meaningful activities, but the outlook for music and advertising sales is strengthening on the rising popularity of major lineups.
Subsidiary: Losses from drama series Joseon Exorcist are unlikely to be reflected in 2Q21 figures. Also, sales from the distribution of HYBE albums (TXT, Seventeen) should be reflected in YG Plus’s earnings from 2Q21.