Shares of South Korea’s major entertainment company YG Entertainment Inc. have tumbled despite its stellar earnings, leading Korean brokerage houses to cut their stock price targets on YG Entertainment hit by scandals at home and overseas disappointments.

On Friday last week, the entertainment firm’s stock price closed at 27,950 won ($23.91), falling 40.2 percent from this year’s high of 46,700 won marked on May 25. The company shares have continued its downward spiral even after it reported a more than 30 percent on-year gain in operating profit in the first six months, as well as an operating profit of 12.1 billion won on sales of 101.3 billion won in the third quarter ended September, highest quarterly results for the third quarter.

Securities firms that see no immediate signs of recovery in the company’s shares have slashed their stock price targets on the firm. Samsung Securities Co. recently lowered its target price on YG Entertainment from 51,000 won to 35,000 won, while Kyobo Securities Co. cut its target from 62,000 won to 40,000 won. Including Samsung and Kyobo, six brokerage firms have so far lowered the company’s target price by more than 10 percent.

Market analysts blamed the lost chance to make a foray into China for the share’s recent losing streak. YG Entertainment’s stocks started to slide after the Korean government in July announced the deployment of the Terminal High Altitude Area Defense (THAAD) system in Korea which has soured the relations between Korea and China, dealing a big blow to the firm that has eyed the Chinese market.

Planned military service of members of its boy group Big Bang, one of the company’s most lucrative revenue sources, is another factor weighing on the company shares. All Korean men are obliged to join the country’s two-year compulsory military service.

Its shares have also remained weak after the firm has been embroiled in the country’s political scandal involving President Park Geun-hye allowing her long-time friend Choi Soon-sil to wield unfettered power over state affairs. The company has denied the looming rumors about its ties with Choi family.

YG Entertainment stocks ended at 28,850 won on Monday, up 3.2 percent, or 900 won, from the previous session.

By Lee Yong-gun

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]