NewJeans Comeback and Continued Future Activities
Limited Impact Even If Removed from HYBE Lineup
Adore's Sales Contribution Around 10%
Contribution Expected to Decrease Further with BTS Comeback in 2025
HYBE's stock price turned pale due to a management dispute with Min Hee-jin, CEO of its subsidiary label ADOR. Securities firms analyze that even if NewJeans is excluded from HYBE's artist lineup, the impact on performance would be limited to around 10%. However, they foresee that HYBE's stock price volatility will be inevitable for the time being.
According to the Korea Exchange on the 24th, HYBE closed at 210,000 KRW, down 1.18% from the previous trading day. Following a 7.81% drop (212,500 KRW) on the 22nd, the stock declined for two consecutive trading days.
Foreign and institutional investors pulled the stock price down. On the previous day, foreigners and institutions sold a net amount worth 4.424 billion KRW and 49.497 billion KRW, respectively. On the 22nd, when news of the management dispute broke, foreigners and institutions sold 11.415 billion KRW and 28.742 billion KRW worth of shares, respectively.
The impact of the management dispute on performance is expected to be minimal. First, since NewJeans' exclusive contract rights belong to HYBE, NewJeans' future activities are expected to continue normally. ADOR is also unlikely to halt NewJeans' comeback.
Even assuming the worst-case scenario where NewJeans is excluded from HYBE's artist lineup, the impact on performance is considered limited. Last year, ADOR's contribution to HYBE's operating profit was around 11%. This year, it is expected to increase slightly.
Hive is initiating an audit of the management of Adore, a subsidiary to which the group NewJeans belongs, leading to conflicts. The photo shows the Hive headquarters in Yongsan. Photo by Jo Yongjun jun21@
Lee Hwa-jung, a researcher at NH Investment & Securities, said, "ADOR's contribution to HYBE's operating profit in 2024 is estimated at 14%. Even if NewJeans' activities are suspended in the second half, it is expected to only affect the release of one album (the second half's full album), so the impact on this year's performance would be less than 10%." She added, "When BTS resumes full-group activities in 2025, NewJeans' (ADOR's) sales contribution will further decrease."
Hanwha Investment & Securities sees a low possibility of NewJeans leaving. Park Soo-young, a researcher at Hanwha Investment & Securities, predicted, "Rather than the worst-case scenario, it is likely that the direction will be to exclude CEO Min from HYBE."
However, securities firms analyze that stock price volatility is unavoidable. Researcher Park pointed out, "During the process of confirming the performance of 'NewJeans without Min Hee-jin,' stock price volatility may increase."
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