YG Leisure: Getting into 2H21 Stuffed with Momentum

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The writer is an analyst of NH Funding & Securities. She could be reached at hzl.lee@nhqv.com. — Ed.

 

We elevate our TP on YG Ent to W71,000, noting the agency’s mid/long-term momentum from each the resumption of offline live shows and full-fledged development on the fandom enterprise. Regardless of an absence of exercise in 2Q21, we count on to witness strengthened gross sales. Additionally optimistic for YG Ent’s share worth are Blackpink’s comeback and Weverse account launch in 2H21.

Fandom enterprise in full swing upon re-opening

We elevate our TP on YG Ent by 15% to W71,000. Our new TP relies on 12M FWD NP (excluding minority pursuits) (vs 2021E NP beforehand) and displays full-fledged fandom gross sales owing to the Weverse collaboration.

We preserve a Purchase score on YG Ent, an organization that boasts sturdy upside from each re-opening and its fandom enterprise. Upon the resumption of offline live shows, the agency ought to profit from: 1) expanded live performance quantity (worth per session, variety of periods) due to Blackpink’s heightened international recognition; 2) the initiation of Treasure live shows amid their rising recognition in Japan; and three) the resumption of Japanese dome excursions upon Massive Bang’s comeback. Spurred by the fandom enterprise, merchandise gross sales also needs to show significant development as soon as offline live shows resume. We additionally positively view the deliberate enlargement of the corporate’s artist lineup from the scheduled debut of a brand new woman group in early 2022.

2H21 occasions: 1) Blackpink’s comeback; and a pair of) Blackpink’s Weverse account launch



In 2H21, along with launching on the Weverse platform, Blackpink could have two comebacks (a Lisa solo comeback in collaboration with DJ Snake, and a full-group comeback). Contemplating Blackpink’s final on-line live performance ticket gross sales, the variety of followers that may be transformed to paying customers is estimated at 200,000~250,000. Price noting is the rise in fandom gross sales (merchandise, content material, on-line live performance) in keeping with the Weverse collaboration.

2Q21 preview: Reconfirming heightened basic energy

On a consolidated foundation, we estimate YG Ent’s 2Q21 gross sales at W64.7bn (+21%  y-y) and OP at W4.3bn (+59% y-y), in keeping with consensus.

Mum or dad: Earnings will inevitably gradual q-q resulting from an absence of significant actions, however the outlook for music and promoting gross sales is strengthening on the rising recognition of main lineups.

Subsidiary: Losses from drama sequence Joseon Exorcist are unlikely to be mirrored in 2Q21 figures. Additionally, gross sales from the distribution of HYBE albums (TXT, Seventeen) ought to be mirrored in YG Plus’s earnings from 2Q21.

 

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