[Alpha Biz= Ellie Kim] YG Entertainment delivered first-quarter operating profit in line with market expectations, supported by a combination of steady activities from newer artists and one-off events from established acts.

However, analysts suggest that target price expectations may need to be lowered due to an anticipated earnings gap in the second quarter and valuation adjustments.

Looking ahead, the company is expected to regain momentum in the second half, driven by the anticipated August comeback of BIGBANG and the debut of a new boy group in September.

According to the financial investment industry on May 12, YG Entertainment reported consolidated revenue of KRW 147.1 billion and operating profit of KRW 19.4 billion for the first quarter, meeting consensus estimates. This represents a year-on-year increase of approximately 47% in revenue and 104% in operating profit.

The key driver of earnings growth was the success of BLACKPINK’s third mini album “DEADLINE,” which surpassed cumulative sales of around 2 million copies, boosting both album and digital music revenue.

Concert revenue also surged 313% year-on-year to KRW 30.9 billion, reflecting performances by BLACKPINK and TREASURE.

A notable highlight this quarter was the increasing contribution from newer artists such as BABYMONSTER and TREASURE. Despite not yet entering full-scale promotional activities, BABYMONSTER generated meaningful merchandise (MD) sales through fan meetings. BLACKPINK accounted for about 50% of total MD sales in the first quarter, with a significant portion of the remainder attributed to BABYMONSTER.

On the downside, non-operating losses weighed on net profit, as approximately KRW 7 billion in valuation losses on financial assets were recognized due to a decline in the share price of Tencent Music Entertainment. As a result, net profit attributable to controlling shareholders stood at around KRW 4.8 billion.

Jang Min-ji, an analyst at Kyobo Securities, said, “A key highlight this quarter is the meaningful contribution of BABYMONSTER’s MD and IP licensing revenue even before its official debut. In the second half, activities by newer IPs—including BABYMONSTER’s world tour, TREASURE’s solo and unit promotions, and the debut of a new boy group—are expected to intensify, potentially expanding their revenue contribution further.”

 

 

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