[Click eStock] HYBE Strengthened by BTS Fever... Target Price Raised to 350,000 Won

[Asia Economy Reporter Lee Seon-ae] Hyundai Motor Securities announced on the 21st that it maintains a buy rating on HYBE and raises the target price by 23% to 350,000 KRW. The target price increase is due to upward revisions of the Q2 earnings estimates reflecting favorable industry conditions and the 2022 earnings estimates reflecting the debut of the new group at the end of this year.

Hyundai Motor Securities analyst Kim Hyun-yong stated, "The basis for the buy rating is the confirmed earnings rebound in Q2, reflecting BTS's Japan album, online concert, digital single, and the domestic comebacks of Seventeen and TXT. Additionally, the enhancement of Weverse, including an increase in online performances in the second half of the year and the addition of top-tier domestic and international artists, is expected."

HYBE's Q2 earnings are projected at 263.1 billion KRW in sales (YoY +69.3%) and 46.1 billion KRW in operating profit (YoY +54.2%), with sales meeting market expectations and profits exceeding them by 10%. Despite the one-time costs related to the acquisition of Ithaca Holdings, the sharp increase in sales and margin improvement effects from the online concert (1.33 million attendees in June) are expected to sustain a solid profit growth trend. The surge in sales is mainly driven by BTS's Japan comeback and the domestic comebacks of Seventeen and TXT, which have significantly boosted album sales.

In Q2, HYBE's album sales reached 5.42 million units (YoY +130%), with BTS and Seventeen each selling 1.8 million units, TXT 900,000 units, and Enhypen 700,000 units, showing balanced contributions from each artist and explosive growth expected. Notably, considering there was no BTS domestic comeback this quarter, the performance of the Japanese best album released in June is very encouraging. Initial sales are expected to be 750,000 to 800,000 units, significantly surpassing the initial sales record of 570,000 units for the Japanese 4th regular album released last July.

Weverse, which is transitioning into a joint venture between HYBE and Naver, is scheduled to launch as an integrated platform within this year. If YG, which is expected to join Weverse, is included, the combined album market share of affiliated artists is projected to exceed 40%. Furthermore, in the case of online concerts, BTS alone accounts for 65% of attendees and 71% of sales market share (based on 1H21), highlighting its dominant position as a K-pop online concert platform.