YG Heralds Artists’ Activities But Securities Company Raises Concerns Over Increasing Operating Expenses

On July 30th, NH Investment & Securities lowered their target stock price for YG Entertainment by 9% from 57,000 won to 52,000 won. This target stock price is calculated for the period from the second half of this year to the first half of next year. It is assumed that activities of various activities would take place simultaneously during this period and there is a potential increase in costs such as labor costs and payments. Researcher Lee Hwa-jung at NH Investment & Securities explained, “It is unprecedented for YG artists to carry out activities at the same time”.

YG recently unveiled “2025 YG PLAN” announcing BLACKPINK’s comeback next year and BABYMONSTER’s first world tour. They are also planning 2NE1’s reunion and world tour. BLACKPINK will hold an offline fan signing event to celebrate their 8th debut anniversary this August and NH Investment & Securities believes that there is no need to doubt BLACKPINK’s commitment to group activities.

NH researchers also lowered the estimated annual album sales figures for senior artists such as TREASURE and BLACKPINK. They believe, “As the entertainment industry is entering the transitional period, the trend of existing fans of existing artists shifting to new artists is visible”, adding “YG Entertainment is gaining benefits from the influx of fandoms through their new group BABYMONSTER”.

In addition, they said, “In the case of boy groups, many competitive rookies have debuted, causing the phenomenon of people leaving fandoms to intensify. The outlook for TREASURE has been adjusted conservatively. At this point, YG needs to debut a new boy group”. TREASURE debuted in 2020.

YG’s operating profit in the second quarter of this year is expected to decline 87% to 3.9 billion won compared to the same period of last year, aligning with the consensus (average estimates from securities companies). Sales are also set at 107 billion won, a decrease of 32%. The researcher explained, “Although there are various activities of the artists, such as TREASURE’s arena tour, the debut promotion of BABYMONSTER still continues in the second quarter, leading to initial cost burdens”, adding “In addition, “The increase in the amortization of intangible asset due to several artists’ contract renewals last year will also a negative impact on the performance.”