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| K-pop girl group TWICE of JYP Entertainment / Courtesy of JYP Entertainment |
Major entertainment stocks on similar path of secondary batteries
By Lee Min-hyung
Entertainment industry players have emerged as a new savior of the Korean stock market on hopes for their structural growth driven by the global popularity of K-pop. Investors expect that entertainment firms may follow in the footstep of secondary battery players ― which had been at the center of investors' attention in the first quarter.
According to data from the Korea Exchange, the combined market capitalization of the nation's four major entertainment stocks ― HYBE, JYP, SM and YG Entertainment ― has soared by around 8 trillion won ($6 billion) already this year alone. The figure accounts for a record high of nearly 1 percent out of the total market cap of the benchmark KOSPI and secondary Kosdaq.
JYP Entertainment stood at the center of the latest industry spotlight, with its stock value skyrocketing by more than 20 percent on May 16 due to its surprising earnings growth. This allowed the firm's market cap to surpass 4 trillion won. The nation's second-largest entertainment firm achieved an operating profit of 42 billion won in the first quarter, up 119 percent from the previous year, on outstanding sales growth of album and music sales.
The company was able to achieve the feat on the growing popularity of its key artists ― TWICE and ITZY ― not just in Asia but also North America.
Market analysts advised investors to expand their portion of entertainment stocks, as their revenues from intellectual property are forecast to rise further on the growing scale of the global fandom industry.
"The key focus of entertainment stocks' earnings growth is on their intellectual property," Shinhan Securities analyst Ji In-hae said. "Earnings from K-pop artists' music, album and goods are highly profitable. Entertainment firms have been able to achieve the better-than-expected earnings on the rapidly growing global fandom market."
She added, "Sales from their intellectual property reached an all-high high in April, and their overall earnings will remain solid in the second quarter as well, as artists' global concerts will be more active during the period."
Other entertainment firms are also widely expected to continue generating decent earnings for similar reasons. HYBE, the largest entertainment firm by market cap here, has teamed up with Geffen Records in the United States to debut a girl group there. This will help raise the entertainment firm's global profile further after the mega-success of boy band BTS.
HYBE shares also have jumped on a path for robust growth in the second quarter on the rosy outlook of the overall entertainment industry. The firm's stocks were traded at around 200,000 won per share in early April, and have since risen rapidly to around 280,000 won as of Thursday.
YG Entertainment shares are on a sharper rally. Its stock value jumped by more than 30 percent in around five trading days on earnings growth.
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