[Click eStock] "HYBE, Prolonged BTS Uncertainty Leads to Stock Slump" ... Target Price Down 22%

[Asia Economy Reporter Ji Yeon-jin] Samsung Securities announced on the 7th that it maintains a buy rating on HYBE despite continued sluggish stock performance due to prolonged uncertainty surrounding BTS, who have declared a hiatus, but lowered the target price by 22.1% from 270,000 KRW to 210,000 KRW.

Choi Min-ha, a researcher at Samsung Securities, stated, "The entry of overseas artists related to Weverse and diversification of revenue models have been delayed more than expected, leading us to revise down the performance indicators and reduce Weverse's valuation from 2.94 trillion KRW to 2.37 trillion KRW. The value of labels including Ithaca Holdings has also been lowered from 7 trillion KRW to 5.71 trillion KRW," adding, "Considering business value and growth potential, we believe the company has entered an undervalued area, so we maintain the buy rating."

HYBE's third-quarter sales this year are expected to reach 407.6 billion KRW, up 19.5% year-on-year, and operating profit is expected to be 61.1 billion KRW, down 6.9%, in line with market expectations. Album releases from affiliated artists included ENHYPEN's 3rd mini-album, SEVENTEEN's 4th full album repackage, ZICO's 4th mini-album, and NewJeans' debut album. At the end of the quarter, BTS's album (Proof - Collector’s Edition) was released, but considering delivery schedules, related sales are expected to be deferred and recognized in the fourth quarter.

Researcher Choi said, "Compared to the previous quarter, which had many album activities, album sales decreased, but MD and licensing and content performance such as YouTube and Memories DVD are estimated to have grown. The game ‘BTS: In the Seom,’ released at the end of June, has stabilized and contributed to increased content sales in the third quarter. With world tours by SEVENTEEN, TXT, and ENHYPEN underway, solid concert sales are also expected."