'Earnings Surprise' Sends JYP Up 16%... Entertainment Stocks Rally in Tandem

[Financial News] JYP Entertainment surged 16% after posting an earnings surprise. Entertainment stocks including HYBE, SM Entertainment and YG Entertainment also closed higher across the board as buying interest flowed in. Combined third-quarter operating profit at the four major entertainment companies soared, while forecasts for fourth-quarter results are mixed.
According to the Korea Exchange, JYP Entertainment closed at 45,100 won on the 12th, up 16.54% from the previous trading day. Its third-quarter operating profit came to 48 billion won, 14% above the market forecast of 42.1 billion won. During the session, the stock at one point soared 23% to 47,600 won. As JYP Entertainment surged, SM Entertainment closed up 6.17%, YG Entertainment gained 4.99%, and HYBE rose 5.35%.
With JYP Entertainment the last of the four major entertainment companies to report, their earnings announcements are now complete. Their combined operating profit rose to approximately 285.4 billion won, nearly four times the 77.9 billion won recorded in the same period a year earlier. However, operating profit at the other three companies, excluding HYBE, fell 19.3%.
HYBE cut selling, general and administrative expenses by producing merchandise locally in North America and improving logistics efficiency. Its gross profit margin fell as concerts made up a larger share of its business, but its operating margin rose 0.6 percentage points from the previous quarter. YG, by contrast, faced significant cost pressures from BigBang’s tours in the Americas and Europe. Lim Su-jin, an analyst at KIWOOM Securities Co., Ltd., explained, “YG PLUS directly handled merchandise distribution and on-site operations for BigBang’s world tour, increasing venue costs, sales commissions and transportation expenses.”
Fourth-quarter results are expected to vary depending on tour locations and new-album release schedules. YG is expected to see profit rise from the previous quarter as BigBang’s tour moves to Southeast Asia and Japan, where venue rental fees are lower, and the number of concerts increases. Lee Gi-hun, an analyst at Hana Securities, forecast that JYP’s fourth-quarter operating profit would decline, factoring in the gap between new releases by Stray Kids and TWICE. Stray Kids will embark on a 46-date world tour next year, with stops in Japan, North America and Europe, among other regions.
[email protected] Lee Jeong-hwa Reporter