[Edaily Reporter Shin Ha-yeon ] On the 21st, SKSecurities assessed that YG Entertainment Inc.(122870)has demonstrated the growth potential of its artists following the success of BABYMONSTER’s Japanese dome concerts. With major artists’ world tours now in full swing, the firm expects third-quarter earnings to meet market expectations and anticipates further expansion of the company’s intellectual property (IP) portfolio following the debut of a new group next year. SKSecurities maintained its “Buy” rating and target price of 63,000 won.

Park Jun-hyung, an analyst at SKSecurities, stated in a report released today, “Since this quarter saw no new album releases but marked the full-scale launch of world tours, we estimate that revenue from concerts will drive earnings.”

YG Entertainment Inc.’s third-quarter consolidated revenue is projected to be 152 billion won, down 12.2% year-over-year, while operating profit is expected to decline 33.5% to 20.7 billion won. Compared to the previous quarter, these figures represent increases of 19.0% and 88.5%, respectively. The operating profit margin is expected to be 13.6%, in line with market expectations.

The concert division is driving these results. In the third quarter, BABYMONSTER and Big Bang held 14 and 8 world tour concerts, respectively, and 19 TREASURE fan concerts were also included. As a result, concert revenue is estimated at 32.5 billion won—approximately 3.5 times higher than the 9.4 billion won recorded in the previous quarter.

Particular attention was drawn to BABYMONSTER’s performance at Japan’s Kyocera Dome. Over two days on September 22–23, BABYMONSTER drew approximately 90,000 attendees, selling out shows with a capacity of 45,000 per performance. Analysts noted that the fact a rookie artist has secured a fanbase large enough to handle a major dome concert significantly increases the likelihood of future tour expansion.

Researcher Park emphasized, “What’s noteworthy is not so much the contribution from BIGBANG’s 20th-anniversary world tour as it is BABYMONSTER’s debut at the Kyocera Dome,” adding, “By drawing approximately 90,000 people over two days—averaging 45,000 per show—and selling out every seat, they proved their ability to handle large-scale dome concerts.”

However, the firm cited the high base from last year’s BLACKPINK world tour and the increased focus on Japanese activities as factors contributing to the year-over-year decline in earnings. Approximately 70% of this quarter’s concert activities were concentrated in Japan, and revenue from Japanese concerts is typically recognized as royalties.

Merchandise (MD) sales are also expected to continue their growth trend. SKSecurities estimated third-quarter MD sales at 30.6 billion won, an increase of approximately 8.9% from the 28.1 billion won recorded in the same period last year.

Analyst Park explained, “Revenue is expected to increase year-over-year as merchandise sales for BIGBANG and TREASURE are added to those of BABYMONSTER, whose sales growth was confirmed even during the second quarter’s off-season.”

The expansion of the artist portfolio was cited as a medium- to long-term growth driver. YG Entertainment Inc. has long been evaluated as having a relatively limited IP portfolio compared to its artist development capabilities. However, analysts suggest that this limitation may be mitigated with the scheduled debuts of a boy group in the first half of next year and a girl group in the second half.

Analyst Park stated, “While the company possesses extensive expertise in artist development, its relatively limited IP portfolio has been cited as a limitation,” adding, “With the expected debuts of a male group in the first half of 2027 and a female group in the second half, we believe expectations for IP portfolio diversification will have a positive impact on the company’s valuation.”

He added, “If their initial performance makes their growth potential tangible, we expect earnings estimates to be revised upward as a result of the groups launching tours quickly.”

He projected this year’s annual revenue at 607.9 billion won and operating profit at 75.8 billion won—representing year-over-year increases of 11.5% and 6.3%, respectively. For next year, revenue and operating profit are expected to reach 561.9 billion won and 69.7 billion won, respectively.