Mirae Asset issues buy recommendation for K-entertainment

2023.11.28 14:33:02 | 2023.11.28 17:53:05

Idol group NewJeans [Photo by Yonhap]이미지 확대

Idol group NewJeans [Photo by Yonhap]

South Korea’s Mirae Asset Securities Co. on Tuesday issued a buy recommendation on the Korean entertainment industry, asserting that its global expansion will accelerate from 2024.

“2024 is the true first year of global expansion for K-entertainment,” Mirae Asset Securities analyst Kim Gyu-yeon said in a report on Tuesday. “With global expansion simultaneously progressing in three areas, the industry will boost earnings and price-to-earnings ratio (P/E) to the next level.”

The three areas are product export, technology export, and revenue model transfer.

Product export refers to the increased contribution of music sales performance as Korean artists succeed overseas, while technology export involves debuting artists (idol groups) in foreign markets based on a group-based planning system.

Revenue model transfer involves transferring the excellence of the K-entertainment revenue model to the Western music market as it proves itself with Korean idol groups. This will allow domestic agencies to incorporate revenue from artists they did not directly produce into the domestic market.

“Based on this system, Korean agencies have systematized the K-entertainment business model, which has the highest customer transaction globally, eliminating the randomness of artist success and maximizing producer profits,” Kim said.

“BTS’s entry into the U.S. market in 2018 opened the era of a 10 trillion won ($7.72 billion) market capitalization for the Korean entertainment industry, along with the listing of HYBE Co., Korea’s largest music label behind the K-pop supergroup, but there was a dependence on a few mega IPs (intellectual properties) such as BTS and BLACKPINK,” Kim noted.

“This year, there were attempts to break away from this oligopoly phenomenon, and the momentum for entertainment industry stocks, which have been sluggish, will be visible next year in figures including music, performances, and goods sales.”

Kim expected K-pop’s market share within the global streaming market to rise to 18 percent in 2024 from 5 percent in 2022 and 10 percent in 2023.

Mirae Asset Securities recommended HYBE as its top pick in the entertainment sector, with a target price of 320,000 won and a buy recommendation.

For JYP Entertainment Corp. and SM Entertainment Co., the brokerage house set the target prices at 140,000 won and 130,000 won respectively with buy recommendations, while providing a target price of 47,000 won and a buy recommendation for Dear U Co.

By Pulse

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