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K-pop agencies likely to join W2tr club on hopes of returning stages

NCT 127 poses at the “Sticker” media showcase in September. (S.M. Entertainment)
NCT 127 poses at the “Sticker” media showcase in September. (S.M. Entertainment)
The market capitalization of K-pop powerhouses S.M. Entertainment and JYP Entertainment are anticipated to reach 2 trillion won ($1.7 billion) for the first time at the closing bell, amid growing hopes of resuming in-person performances under the “living with COVID-19” scheme.

At Wednesday’s closing, S.M. Entertainment’s market value stood at 1.97 trillion won, while JYP Entertainment came to 1.9 trillion won. The entertainment firms refreshed their 52-week high closings of 83,100 won and 53,600 won, respectively, up 1.71 percent and 0.37 percent from the previous session’s close.

Despite some unfavorable conditions surrounding the companies, their stocks have soared lately on the back of market observers’ positive third-quarter earnings outlook and their artists’ preparation to return to physical stages.

S.M. Entertainment joined the 1 trillion-won market cap club for the first time in July 2012, followed by JYP Entertainment in August 2018. They were the two leading stocks in the local entertainment sector, in terms of market capitalization, until the market debut of BTS’ management agency, Hybe, in October last year.

The shares of two K-pop agencies, however, traded bearish amid a series of negative events, including the Burning Sun scandal in 2019 and the unprecedented COVID-19 pandemic, resulting in their market cap plunging to below 1 trillion won momentarily. 

Logos of S.M. Entertainment (left) and JYP Entertainment
Logos of S.M. Entertainment (left) and JYP Entertainment
Kiwoom Securities raised its target price of S.M. Entertainment from 78,000 won to 90,500 won, while JYP Entertainment’s target price has been set at 63,000 won from the previous target of 58,000 won.

“Local artists started to release schedules of shows, concerts and performances to be resumed under the government’s road map for a gradual return to normalcy from the COVID-19 pandemic. ... Especially, the resumption of offline concerts is expected to meet an explosive growth of demand,” Lee Nam-soo, an analyst at Kiwoom Securities, said in a note.

Other market watchers said that CJ ENM’s review of S.M. Entertainment’s acquisition and the K-pop powerhouse’ affiliated firm Dear U’s planned initial public offering are positive factors to the firm’s share price. Meanwhile, JYP Entertainment is the second-largest shareholder of Dear U, holding a 23.27 percent stake.

Major entertainment firms listed on the domestic stock market also hit their 52-week high closings on the same day, spurred by improved investor sentiment.

Shares of Hybe added 1.9 percent to close at 348,500 won, which pushed the market cap to 13.61 trillion won. YG Entertainment moved up 2.26 percent to 72,500 won. The market value of entertainment agency behind Blackpink stood at 1.32 trillion won.

By Jie Ye-eun (yeeun@heraldcorp.com)
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