South Korea's major entertainment agencies are expected to see improved earnings next year on growing album sales and global activities of their idol groups, analysts said Tuesday.
SM Entertainment and JYP Entertainment, the two largest agencies by market capitalization, reported better-than-expected third-quarter earnings, and they are poised to deliver further improvement in their bottom lines, according to them.
SM Entertainment's July-September sales rose to 173.5 billion won ($148.5 million), up 2.8 percent from a year ago.
SuperM (SM Entertainment)
The revenue hike was led by robust album sales of over 1.4 million copies, thanks to its K-pop bands NCT Dream, Red Velvet and three units of EXO. Its boy groups EXO, TVXQ and NCT127 staged more concerts locally and globally during the cited period.
SM's sales is expected to grow 26.3 percent in 2020, Hyundai Motor Securities estimated, as the agency has more cash-making events coming up. Billboard 200 champion SuperM will go on a U.S.-Canada tour, while EXO and Super Junior will be on separate world tours. EXO's new album release is imminent, and Way V will soon hit China for a broader market, the brokerage house said.
Buoyed by expectations about earnings improvement, SM's stock price, which hit the year's low of 27,000 won on Aug. 26, rose to 39,300 won on Nov. 19.
Another entertainment agency, JYP Entertainment, also saw its July-September sales spike the most among the big-three agencies to 45.5 billion won, up 34.1 percent on-year.
The management firm's operating profit jumped by 74.5 percent, largely due to fat album sales of hit groups -- TWICE, GOT7 and ITZY.
JYP is expected to make an upbeat run next year as new idols are set to debut in Japan and China. The company plans to further increase global concerts and improve efficiency in independently produced digital content.
JYP's share price also rose to 23,500 won on Nov. 19 from the year's low of 16,300 won on Aug. 6.
YG Entertainment, unlike its two rivals, reported downbeat earnings for the third quarter, hit by a series of scandals. The firm's sales fell 2 percent on-year to 63.7 billion won, and it swung to an operating loss of 3.1 billion won.
YG's bleak performance began with a corruption scandal in November 2018, widely known as "Burning Sun gate," involving Seungri of YG's star group BIGBANG. Seungri had his contract terminated due to the fiasco, while other BIGBANG members have kept silent about further extending their contracts, which expire at the end of the year.
In June 2019, YG Chairman Yang Hyun-suk resigned from his post after being investigated over illegal overseas gambling.
Adding to this is that its girl group BLACKPINK, the most lucrative YG band along with BIGBANG, is likely to push back its comeback season to next year.
The star management agency's annual sales for the year is estimated to shrink 5 percent, according to SK Securities. The brokerage said the agency has uncertainties to clear out for better earnings in 2020.
YG shares, after reaching the year's high of 50,800 won on Jan. 7, plunged to the year's low of 19,300 won on Aug. 26, but rebounded to close at 24,850 won on Nov. 19. (Yonhap)