[Edaily Reporter Kwon Oh Seok ] SANGSANGINVESTMENT&SECURITIES announced on the 11th that it is maintaining its “Buy” rating and target price of 63,000 won for YG Entertainment Inc.(122870)(YG).

Lee Na-ra, an analyst at SANGSANGINVESTMENT&SECURITIES, stated, “With 24 Big Bang world tour dates and 11 BABYMONSTER world tour dates scheduled for the fourth quarter, the profitability of concert revenue is expected to drive earnings again this quarter.” She added, “With the debut of a new boy group scheduled for the first half of 2027, there is a possibility that the debut of a girl group will also be brought forward to the same period, which we believe will improve investor sentiment.”
Previously, third-quarter results showed consolidated revenue of 156.7 billion won (down 9.4% year-over-year) and operating profit of 13.5 billion won (down 56.8%), with operating profit falling 32.4% short of the consensus estimate of 19.9 billion won. He explained, “The cost of sales ratio for concerts rose due to initial production costs for the Big Bang World Tour and the financial burden of performances in high-cost regions such as Europe. It appears that costs related to the Big Bang World Tour, as well as merchandise operations and distribution, had a significant impact,” he analyzed, adding, “Furthermore, operating profit fell significantly short of market expectations due to the recognition of approximately 2 billion won in bad debt expenses related to YG PLUS’s merchandise receivables.”
Due to a hiatus in the release of physical albums by major intellectual property (IP) artists, album sales totaled only 3.2 billion won (-73.0%). Digital music sales totaled 19.1 billion won (-5.6%). Concert revenue amounted to 43.9 billion won (-13.7%). Although a total of 41 major IP concerts were held—including 8 Big Bang World Tour shows, 14 BABYMONSTER World Tour shows, and 19 TREASURE shows—revenue decreased year-over-year due to the high base set by BLACKPINK’s World Tour during the same period last year.
Fortunately, driven by strong on-site merchandise demand accompanying the BIGBANG and BABYMONSTER world tours, merchandise sales reached 40.6 billion won (+44.4%), showing significant growth. The royalty segment included approximately 5 billion won in merchandise and licensing revenue.
The analyst added, “As the debuts of new artists from major entertainment companies are scheduled for the first half of next year, the momentum from these new artists is expected to boost growth in the early stages of their careers, which could serve as a catalyst for improved investor sentiment across the entire entertainment sector.”