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(Photo = YG Entertainment) |
[Alpha Biz= Reporter Kim Minyoung] Yuanta Securities lowered YG Entertainment's target price from 65,000 won to 60,000 won on the 14th. This is because the company lowered its operating profit estimate for this year due to poor performance in the first quarter. However, the investment opinion remained 'buy' considering that the time for Blackpink's full-fledged activities is approaching.
"Except for Treasure's concert in Japan and the release of a digital single by Baby Monster, sales reverse growth was inevitable in the first quarter due to lack of artists' activities. New intellectual property (IP) costs were incurred, and the profit margin was damaged by the increased cost of amortizing intangible assets," Yuanta Securities said.
"The launch of Baby Monster and new IP investment reached 5 billion won in the absence of high-margin album sales," Yuanta Securities said. "The main reason for the poor performance is that YG investment products recorded valuation losses."
YG Entertainment's operating loss in the first quarter was 7 billion won. The operating profit, which is a consensus (average estimate of securities firms), was far below 7.7 billion won. Individual sales and operating losses are 44.6 billion won and 6.7 billion won, respectively. Yuanta Securities estimated its annual operating profit at 24.9 billion won. It is 71.3% lower than the previous year.
Yuanta Securities expects its performance to improve at a low point in the first quarter.
Alphabiz Kim Minyoung (kimmy@alphabiz.co.kr)
