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Music & Entertainment

FNC Entertainment next in line for global success, shares surge

The resumption of live concerts will help Korean entertainment companies post strong earnings, analysts say

By Oct 19, 2021 (Gmt+09:00)

▲ 【Who is Princess?完全版】10/3(日)独占配信決定!(Courtesy of Hulu)

Shares of FNC Entertainment Co., a mid-size South Korean entertainment agency, are surging on expectations that offline concerts will soon resume with increased vaccinations and moves to return to normal life post-pandemic.

The stock climbed more than 12% to close at a 31-month high of 9,910 won on Monday. This month alone, FNC Entertainment has risen 67%.

Korea’s major music labels have performed strongly year to date as they are preparing to open live concerts globally.

More recently, entertainment shares have also been boosted by expectations that the government will soon implement the “With Corona” policy in a shift of quarantine rules to let people with mild COVID symptoms live a normal life without isolation.

Shares of HYBE Co., the agency behind boyband sensation BTS, have risen 88.5% so far this year, while SM Entertainment Co. has gained 132.6% and YG Entertainment Inc. has advanced 38.3%, all outperforming the broader benchmark index.

HYBE said last month BTS will travel to Los Angeles in November for its first live concert since the outbreak of the COVID-19 pandemic.

BTS Permission to Dance on Stage will be held in LA’s SoFi Stadium Nov. 27-28 and Dec. 1-2, according to HYBE.

By contrast, FNC Entertainment’s shares had been subdued up until September as the smaller music label lacked K-pop stars, unlike its bigger rivals.

Who is Princess?, a girl group debut survival show based in Japan produced by FNC Entertainment
Who is Princess?, a girl group debut survival show based in Japan produced by FNC Entertainment

WHO IS PRINCESS?

However, the situation has changed since the start of this month after FNC Entertainment aired a girl group debut survival show Who is Princess? in Japan in partnership with Japan’s broadcasting network NTV.

On the program, 15 trainees aged between 13 and 19 are competing to debut in a five-member girl group, to perform initially in Japan and then reach further out into the world.

The trainees have already auditioned and trained according to harsh K-pop standards, FNC said.

“The girl group to debut through the TV survival show is expected to sell at least 600,000 albums a year, raising FNC’s revenue by more than 50%,” said Hyundai Motor Securities analyst Kim Hyun-yong.

FNC Entertainment’s other boyband groups such as CNBLUE and F.T. Island are also set to start their live concerts as soon as restrictions on COVID-related quarantine and isolation measures are eased.

“CNBLUE and F.T. Island have a strong fan base in Japan. The entertainment agency has high hopes for the resumption of their live concerts,” said analyst Kim.

NiziU, produced by JYP Entertainment, is currently Japan’s most popular girl group
NiziU, produced by JYP Entertainment, is currently Japan’s most popular girl group

JAPAN, HOTBED FOR KOREAN MUSIC AGENCIES

For Korean entertainment agencies, Japan has been a hotbed for launching a series of locally produced artists and entertainment content.

Japan’s popular girl group NiziU, produced by JYP Entertainment Inc., is the epitome of Korean music labels’ new business model. Every member of NiziU is of Japanese nationality, and they sing in Japanese.

In August, NiziU released a new album with two of their songs hitting more than 100 million streams on the country’s Oricon chart, often referred to as Japan’s Billboard chart, becoming the first girl group to do so.

JYP Entertainment created NiziU through a global audition project called Nizi Project in partnership with Japan’s largest music label Sony Music.

BTS will travel to Los Angeles in November for its first live concert since the COVID outbreak.
BTS will travel to Los Angeles in November for its first live concert since the COVID outbreak.

“Concert tours are undoubtedly the most profitable business for entertainment agencies. Once COVID fears subside and live concerts resume, concert tours will become the cash cow again on a larger scale,” said HI Investment & Securities analyst Park Da-gyum.

He chose HYBE as his top pick in the entertainment sector as BTS is soon expected to embark on a world tour before some of its members are conscripted for South Korea’s mandatory military service.

Write to Sul-Gi Lee at surugi@hankyung.com

In-Soo Nam edited this article.

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