2024-02-10 08:08:27
Yang Hyun-seok, YG Entertainment executive producer (left), and Park Jin-young, JYP Entertainment chief creative officer (CCO). [사진 = 각사]
As entertainment stocks, which were doing well last year, are showing an overall decline, entertainment heads who began buying back shares last month are unable to avoid valuation losses worth hundreds of millions of won. They brought out a large-scale stock repurchase card to prevent the stock price from falling, but it did not seem to have much effect.
End of share buyback effect?… Return to negative return
According to stock market sources on the 10th, JYP Ent. The stock price fell 8.20% from the 17th of last month to the 8th, when Jinyoung Park, the largest shareholder and chief creative officer (CCO), purchased the company’s shares.
YG Entertainment also fell 1.86% from the 18th of last month to the 8th, when its largest shareholder, general producer Yang Hyun-seok, purchased its shares.
The stock price returns of these stocks were not only lower than the KOSDAQ market return rate (-0.77%) from the 17th of last month to this day, but also far below the KOSPI increase rate (7.57%).
CCO Park Jin-young and General Manager Yang Hyun-seok are suffering valuation losses due to the stock price falling day following day even following the share purchase. The average acquisition price of their own shares is higher than the current stock price, and the return on purchases this year has turned negative.
As a result of the decline in stock prices, the amount of losses suffered by CEOs is also increasing. CCO Park Jin-young is recording a valuation loss of approximately 400 million won (-8.31%) due to investment in treasury stocks during the period. Manager Yang Hyun-seok’s investment performance is also a loss of regarding 500 million won (-2.55%).
It is calculated that if 20 billion won worth of shares of Samsung Electronics, a leading KOSPI stock, were purchased on the 17th of last month, a profit of regarding 900 million won (4.37%) would have been made.
The head with the largest share repurchase amount was Yang Hyun-seok. He purchased 461,940 shares of the company’s stock (average price 43,305 won) over three days starting from the 18th of last month. The total purchase amount is 20 billion won. Yang’s shareholding increased from 16.8% to 19.3%.
Previously, CCO Park Jin-young also purchased 60,200 shares of the company’s stock worth 5 billion won (average price 83,000 won) over two days on the 17th and 18th of last month. His stake increased from 15.22% to 15.37%.
The stock price boost effect is ‘well’… The National Pension Service also reduced its stake.
After rising ‘sparklingly’ due to the effect of share buybacks, the two stocks are falling once more without knowing the bottom. Usually, share buybacks are taken as a signal that the stock price is at the bottom and act as positive news for the stock price, but the upward trend does not last long.
JYP Ent. The stock price rose by nearly 2% the day following the stock purchase was announced, but soon turned downward. YG Entertainment also went downhill once more following rising slightly for four consecutive trading days starting on the 23rd of last month when the announcement was made.
The National Pension Service, a ‘big player’ in the domestic stock market, immediately began adjusting its portfolio. The National Pension Service announced on the 1st that it had disposed of a 1.49% stake in YG Entertainment, resulting in a stake of 4.29%.
The sluggish stock prices of the two stocks are interpreted to be due to the fact that their performance in the fourth quarter of last year is expected to fall below market expectations. According to financial information company FnGuide, the expected operating profit for the fourth quarter of last year was JYP Ent. 48.8 billion won, YG Entertainment 8 billion won. This is below market expectations.
JYP Ent.’s low album sales by girl group ITZY also appear to have had an impact on its stock price decline. In the case of YG Entertainment, it has been on a decline since the individual exclusive contracts of Blackpink members were cancelled.
Securities analysts are also lowering their expectations for these stocks one following another. The average target stock price of 10 securities firms that have lowered the target price for JYP Ent. this year is around 116,000 won. During the same period, there were 6 securities companies that lowered the target price for YG Entertainment, and the average target stock price was around 63,000 won.
Lee Hwa-jeong, a researcher at NH Investment & Securities, said, “JYP Ent.’s investment sentiment has deteriorated extremely due to a series of negative growth in album sales,” but added, “However, negative growth in sales does not mean the artist is peaking out, so we can expect a rebound in sales of their next work and an expansion in the scale of performances.” “It’s worth it,” he said.
Kim Hye-young, a researcher at Daol Investment & Securities, said, “Since YG Entertainment’s Baby Monster activities will begin in earnest in the first quarter of this year, if the success becomes visible, the sales contribution of new intellectual property rights (IP) will accelerate.”
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