[Click eStock] "HYBE, Limited Earnings Impact Even Under Worst-Case Scenario"

Performance Setback Priced In
Less Than 10% Impact on This Year's Results Even in Worst-Case Scenario

[Image source=Yonhap News]

NH Investment & Securities evaluated on the 23rd that even in the worst-case scenario regarding the conflict between HYBE and its subsidiary Min Hee-jin's Adore CEO, the impact on performance would be limited. Accordingly, they maintained their investment opinion as 'Buy' and the target price at 310,000 KRW.

Researcher Lee Hwa-jung of NH Investment & Securities stated, "Even if NewJeans' activities are suspended in the second half of the year, it would practically only affect the release of one album (the second half full-length album)," and added, "We assess the impact on this year's performance to be less than 10%." In other words, concerns about performance setbacks have mostly already been reflected in the stock price.

Lee predicted, "Unless there is a separate request from Adore, HYBE plans to support the scheduled activities of NewJeans to proceed normally, and it is unlikely that Adore will stop NewJeans' comeback." Since there is only about a month left until NewJeans' comeback, the benefits of suspending activities are not significant.

Lee estimated Adore's operating profit contribution within HYBE in 2024 to be 14%, considering NewJeans' three albums (May single, June single and Japan release, second half full-length album) and the Japan concerts (two Tokyo Dome shows). In 2023, Adore's operating profit contribution within HYBE was 11%. This included album and digital music sales from NewJeans' two album releases (single and mini album). For 2025, it was assessed that NewJeans' contribution would further decrease as BTS resumes full-group activities.

Lee emphasized, "HYBE's overall labels have efficient content production and rookie development capabilities, so dependence on a single label is not increasing," and added, "It would be best if the conflict related to Adore is resolved quickly and amicably, but even if that does not happen, the damage to HYBE's mid- to long-term growth drivers will be limited."