Lee Ki-hoon, an analyst at Hana Securities, stated in an entertainment industry report on the 2nd, “Although stock prices have been quite weak due to supply-and-demand issues centered on AI, second-quarter earnings are expected to generally meet consensus estimates.” He added, “Since the price correction has been steeper than the expected market correction, I strongly recommend increasing exposure to the sector.”
Hana Securities assessed that, based on current stock prices, HYBE(352820)is significantly undervalued at a projected price-to-earnings ratio (PER) of 22 times for 2027, while SM ENTERTAINMENT CO., Ltd.(041510)(SM),JYP Entertainment Corporation(035900), andYG Entertainment Inc.(122870)are trading at around 12 to 15 times their 2026 earnings.
The firm projected that second-quarter earnings for HYBE and SM would meet market expectations, while those for JYP and YG would fall slightly short. Hana Securities forecasts second-quarter operating profit at 144.5 billion won for HYBE, 53.8 billion won for SM, 37.9 billion won for JYP, and 7.7 billion won for YG. Compared to the same period last year, HYBE and SM are expected to see increases of 119% and 13%, respectively, while JYP and YG are projected to see declines of 27% and 7%, respectively.
HYBE is the key factor driving the sector’s rebound. Hana Securities expects HYBE to post record-high second-quarter earnings, driven by the success of BTS’s world tour. It estimated that a total of 1.7 million concert attendees—including approximately 1.3 million from BTS’s 24-show world tour—would be reflected in the earnings. The report added that the comebacks of numerous artists, including TXT, Cortis, LE SSERAFIM, Boy Next Door, and Ailette, also contributed to the results.
In particular, Hana Securities highlighted Cortis and Cat’s Eye as key growth drivers following BTS. Cortis’s recent comeback album has already sold 2.9 million copies, and the firm expects sales to exceed 3 million when including sales of additional versions in the third quarter. Cat’s Eye is also expected to sell around 1 million albums with this comeback. The analyst stated, “Cortice and Cat’s Eye are changing the world,” predicting that their rapid growth will have a positive impact on competing groups as well.
SM’s second-quarter earnings were expected to meet consensus estimates, driven by the comebacks of NCT Wish, aespa, RISE, and HAATZ Inc., as well as the impact of concerts. Hana Securities estimated SM’s second-quarter revenue and operating profit at 330.5 billion won and 53.8 billion won, respectively. Album sales were projected at approximately 5.6 million copies, and concert attendance at approximately 920,000 people. The debut of the new male group SMTR later this year and NCT 127’s full-group activities in 2027 were also cited as future earnings drivers.
Despite weak second-quarter results, JYP is assessed to have significant room for a rebound in the second half of the year. While second-quarter operating profit is expected to fall short of the consensus at 379억 원, analysts anticipate that earnings momentum will strengthen in the third quarter with Stray Kids’ comeback and the start of their world tour. Analysts note that the already-announced Asian schedule—including South Korea—alone is expected to draw approximately 59만 명, and if the tour expands to North America and Europe, it could once again reach over 200만 명.
YG is also projected to report second-quarter operating profit of 7.7 billion won, falling short of market expectations. However, Big Bang’s 20th-anniversary comeback and tour are emerging as key variables for the second half of the year. Hana Securities noted that Big Bang has announced 31 dome and stadium concerts starting in Goyang in August and running through February 2027, and assessed that there is a high likelihood of additional shows being added. Taking into account their album comeback in the second half of the year and rising merchandise sales, the firm believes annual operating profit of around 80 billion won is possible.
The analyst stated, “Sector stock prices have fallen by 40–50% in just four months due to concerns over the pre-reflection of BTS’s record-breaking earnings and the lack of subsequent growth drivers,” adding, “If concerns regarding HYBE’s earnings are alleviated, other entertainment agencies are likely to see their stock prices rise as well.”
