[Click eStock] KB Securities "BTS Returns... HYBE, Q2 Earnings Improvement Expected"

[Asia Economy Reporter Ji Yeon-jin] KB Investment & Securities stated on the 22nd that it maintains a buy investment opinion and a target price of 305,000 KRW for HYBE, as major idol groups such as BTS, Seventeen, NU'EST, and GFriend are making comebacks in the second quarter of this year, which could increase album sales.

HYBE is expected to experience poor performance in the first quarter due to no album releases from its affiliated artists. During this period, sales are projected to be 173.7 billion KRW, a 44.4% decrease compared to the previous year, and operating profit is expected to decline by 57.3% to 22.4 billion KRW. Although operating profit falls short of market expectations (26.6 billion KRW), excluding one-time costs of 5 billion KRW related to the office relocation, operating profit aligns with consensus levels.

In the first quarter, HYBE's album sales volume was 1.81 million copies, down approximately 61% year-on-year. This is due to the base effect from BTS releasing the 'Map of the Soul: 7 ? ON' album in February last year.

Additionally, amid the absence of performances due to COVID-19, sales generated from MD/licensing, content, and fan club memberships are expected to reach about 115.4 billion KRW, accounting for 66% of total sales.

Lee Seon-hwa, a researcher at KB Investment & Securities, said, "Despite one-time costs of about 5 billion KRW related to the office relocation, operating profit is expected to remain at a favorable level as the proportion of high-margin artist indirect participation sales increases." She added, "Furthermore, from May, Ithaca Holdings' performance will be consolidated, adding 120 billion KRW in sales and 40 billion KRW in operating profit this year. In May, there is a high possibility of inclusion in MSCI Korea, which is expected to have a positive impact on short-term supply and demand."