Securities firms believe that small and medium-sized companies will be “waging a silent war” against Korea’s “Entertainment Big 4”
HYBE, JYP Entertainment, SM, and YG Entertainment, there is no dispute that these companies are the “Entertainment Big 4” in Korea. However, many small and medium-sized companies are waging a silent war to become the “Entertainment Big 5”. Among them, Cube Entertainment, the agency that houses (G)I-DLE, is seeing a notable rise in stock prices.
Cube Entertainment’s stock price has risen 54% this year
Cube Entertainment’s closing price on April 7th was 24,200 KRW. Compared to the closing price of 15,700 KRW on January 2nd, it has jumped 54.14% this year. What are the reasons for the rise? IBK Investment & Securities said in a report that “performance is improving due to the expansion of the global fandom of major artist (G)I-DLE.”
In particular, Lee Hwan Wook Lee, an analyst at IBK Investment & Securities, said, “Not only the direct sales of (G)I-DLE’s albums, music, performances, and advertisements, but also the increase in sales of secondary products related to intellectual property (IP), such as high-profit content (YouTube), is noticeable.”
Last year, Cube Entertainment recorded 120.6 billion KRW in consolidated revenue (up 67.7% Year on Year) and 6.9 billion KRW in operating profit (up 485.6% YoY). (G)I-DLE’s album sales have continued to grow in quantity, with 150,000 copies sold for their 3rd mini-album in 2020, 202,000 copies for the 4th mini-album in 2021, 254,000 copies for the first full-length album (March) in 2022, and 839,000 copies for the 5th mini-album in October of the same year. This year, it is expected that (G)I-DLE’s new album release will make them a million-seller (over 1 million copies sold).
“If the Hallyu ban in China is lifted, they can directly benefit,” the analyst also said, adding, “The number of advertisement contracts for Chinese member Yuqi is continuously increasing.”
(G)I-DLE’s continued success, new boy group and girl group to be unveiled
Kiwoom Securities said, “Cube Entertainment plans to introduce one new boy group and girl group this year.” This year’s revenue is expected to be 160.5 billion KRW (up 36.8% YoY) and operating profit 16.2 billion KRW (up 122% YoY). Sector-wise, entertainment is expected to bring in 94.3 billion KRW (up 62% YoY) and cosmetics 66.1 billion KRW (up 12% YoY).
Lee Nam Soo, a researcher at Kiwoom Securities, mentioned, “The main driving force behind the improved performance is (G)I-DLE, who are emerging as global stars”, adding, “It will be of great help to strengthen profitability through sources such as concerts and advertisements..”
In addition, the economic impact of (G)I-DLE’s world tour is expected to be greater than last year. As of April 7th, the number of Weibo subscribers for Chinese member Yuqi of (G)I-DLE has reached 7.63 million. This ranks 6th among K-pop artists (including Psy), 5th among K-pop idol singers, and 2nd among female idol singers, following BLACKPINK Lisa (8.93 million).
According to Cube Entertainment on April 10th, the company is developing a metaverse platform with their joint venture, AniCube Entertainment and Animoca Brands. They are also partnering with domestic companies and expanding the blockchain ecosystem.
At the same time, Cube Entertainment is reportedly preparing to issue NFTs in collaboration with PALA, the largest NFT exchange in South Korea. When asked about a shareholder return policy, the official said, “We are considering various options to enhance shareholder value.”
Meanwhile, Cube Entertainment’s parent company, VTGMP, has risen 23.85% this year. During the same period, HYBE rose 28.02%, JYP Entertainment 14.88%, SM Entertainment 29.79%, and YG Entertainment 27.99% making Cube Entertainment have the highest return among entertainment companies.
Source: Hankyung
