[Alpha Biz= Paul Lee] On May 7, Daishin Securities stated that JYP Entertainment's (JYP Ent.) first-quarter performance is expected to be weak, but profits will begin to improve in the second quarter. The firm maintained its "Buy" rating and target price of 85,000 KRW for the company.
For the first quarter of this year, JYP Ent. is estimated to report consolidated sales of 118.4 billion KRW, a 13.2% decline compared to the same period last year. Operating profit is expected to be 13.8 billion KRW, down 58.9%, falling below market expectations.
This decline is attributed to one-off costs, including initial promotion expenses for the new boy group, KICKFLIP, and remaining costs related to the audition program "The Ddanta" amounting to approximately 2 billion KRW. Additionally, in the first quarter, the company lacked significant intellectual property (IP) releases and focused on small-scale performances, leading to a continuation of the margin decline seen in the fourth quarter.
However, the decline is considered to be largely one-off, and the growth potential of lower-tier IPs has been reaffirmed, which is seen positively.
Daishin Securities expects a significant performance improvement in the second quarter, driven by Stray Kids' large-scale concert schedule. In the third quarter, the release of a new album by TWICE and news of a new world tour are expected to provide positive momentum for both performance and valuation.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
