Hana Securities analyst Lee Ki-hoon recommended an overweight position on entertainment stocks, stating current valuations represent significant undervaluation with HYBE trading at 22 times earnings and SM, JYP Entertainment, and YG Entertainment at 12-15 times. The analyst cited a steeper price correction than anticipated as the rationale for the upgrade. Despite weak recent performance due to supply-demand issues concentrated in AI sectors, Q2 earnings are expected to largely meet market consensus, with underperforming companies anticipated to show strong earnings momentum in the second half.
Hana Securities Cites Fifth-Generation Groups as Growth Catalyst
Lee stated that fifth-generation groups Kortis and Katseye are growing at a pace that will change history and that this growth will positively impact competing groups. The analyst emphasized the importance of HYBE's Q2 results for resolving undervaluation concerns, particularly regarding BTS distribution rate worries, and noted that April-May cumulative tour revenues suggest the company can meet high expectations. Lee added that SEVENTEEN is resolving military service issues with eight members expected to be available for activities from next year's Q2, and that if HYBE rebounds, other agencies will rise in tandem.
HYBE Q2 Operating Profit Forecast at 144.5 Billion Won
Hana Securities forecast HYBE's Q2 operating profit at 144.5 billion won, representing a 119% year-over-year increase. SM Entertainment's Q2 operating profit is expected at 53.8 billion won, up 13% year-over-year. Lee stated that HYBE's record earnings are driven by BTS's historic world tour, while SM's strong performance reflects simultaneous comebacks by NCT WISH, NCT RISE, and aespa. JYP and YG are expected to show relatively weaker Q2 results.
SM, JYP, YG Entertainment Prepare Second-Half Comebacks and Tours
Lee explained that JYP Entertainment is preparing for record earnings in the second half with a Stray Kids comeback and large-scale tour, while YG Entertainment is preparing a BIGBANG 20th anniversary tour starting in August and planning to debut a new boy group within the year.
FAQ
What is Hana Securities' valuation assessment of Korean entertainment stocks?
Hana Securities analyst Lee Ki-hoon stated that HYBE is trading at 22 times earnings while SM, JYP Entertainment, and YG Entertainment are trading at 12-15 times, which he described as significant undervaluation levels.
What are HYBE's Q2 earnings expectations?
Hana Securities forecast HYBE's Q2 operating profit at 144.5 billion won, a 119% increase year-over-year, driven by BTS's historic world tour contributing to record earnings.
Which entertainment companies have second-half growth catalysts?
JYP Entertainment is preparing a Stray Kids comeback and large-scale tour for record second-half earnings, while YG Entertainment is preparing a BIGBANG 20th anniversary tour starting in August and planning to debut a new boy group within the year.
