[Alpha Biz= Reporter Kim Sangjin] Hana Securities, on the 28th, stated that although JYP Entertainment (035900) saw a significant stock price surge following a third-quarter earnings surprise, it remains undervalued given its expected profit growth in the coming year. The firm maintained a “Buy” recommendation, raising its target price from KRW 78,000 to KRW 94,000, reflecting a 21% increase. The stock closed at KRW 73,500 the previous day, implying a potential upside of 28% to the new target.
Why JYP Entertainment Remains Undervalued:
Impressive Growth from Stray Kids’ Global Tours
Hana Securities focused on the continued success of Stray Kids' global tours, which are surpassing market expectations.
The group’s North and South American stadium tours, initially planned for 20 cities with 20 performances, could attract over 1 million concert-goers.
Due to high demand, additional performances have already been added in cities such as Mexico City, Los Angeles, and New York, with at least five more shows likely to be scheduled.
Looking ahead to 2025, Stray Kids is set to hold major dome tours in Korea and Japan, potentially doubling the scale of this year’s tours to 1.6–1.8 million attendees.
Strong Financial Outlook for 2025
JYP Entertainment's financial performance is expected to continue improving, with notable revenue and profit growth:
2025 revenue is projected to grow by 23% year-on-year to KRW 706.6 billion, while operating profit is expected to rise by 27% to KRW 165.4 billion.
The company’s merchandise (MD) sales tied to global tours are expected to significantly contribute to this growth. Additionally, the company could benefit from dynamic pricing strategies in the North American market, which could drive further revenue growth.
An Undervalued Leader in the Industry
Despite a 37% jump in stock price following the earnings surprise, JYP Entertainment's valuation remains attractive. With a 2025 price-to-earnings ratio (PER) of just 20x, it is still considered one of the most undervalued entertainment agencies in the industry.
Investment Rationale
Hana Securities emphasized that JYP Entertainment’s strong global growth, driven by Stray Kids' performances and additional revenue from merchandise and dynamic pricing, positions the company well for continued profitability. Despite the recent stock price increase, JYP remains undervalued, making it an appealing investment opportunity with significant potential for future gains.
With its global success and financial growth prospects, JYP Entertainment remains one of the most undervalued entertainment stocks, offering investors solid upside potential.
Alphabiz Reporter Kim SangJin(letyou@alphabiz.co.kr)
