[Click eStock] "HYBE, Future Growth Expected Due to Increase in Rookie Groups... Target Price Down"

Target Price Revised Downward by 6% Compared to Previous Level

Daishin Securities on the 5th downgraded the target price for HYBE from 330,000 KRW to 310,000 KRW, citing a short-term decrease in operating profit margin due to an increase in rookie groups but expecting future growth potential to expand. The investment rating was maintained at 'Buy.'

Researcher Sujin Lim of Daishin Securities explained, "The target price downgrade is due to a multiple adjustment caused by a decrease in earnings per share (EPS) from increased album production costs and selling and administrative expenses due to the rise in rookie groups, as well as uncertainties from additional lawsuits related to ADOR."

HYBE's second-quarter performance this year is expected to fall short of market expectations. Researcher Lim said, "HYBE's second-quarter results are projected to show sales of 652.4 billion KRW, a 5.1% increase compared to the same period last year, and operating profit of 81.2 billion KRW, a 0.1% decrease, which will fall 12% short of the consensus (average securities firm forecast). Although album sales in the second quarter exceeded expectations, operating profit will fall short of previous estimates due to a decrease in the proportion of light stick sales, increased album production costs, and partial reflection of debut costs for Cats Eye."

There is an opinion that attention should be paid to solid album sales revenue and better-than-expected rookie growth potential. Researcher Lim analyzed, "Despite the overall decline in album sales in the entertainment industry and recent issues with HYBE, the current stock price appears significantly undervalued. While album sales figures may seem lower compared to the previous year, the most important revenue is actually continuing to grow." Seventeen's best album average selling price (ASP) increased by 88% compared to the previous work, and NewJeans is expected to record sales similar to last year with two album releases in the quarter. Additionally, following Aileit in the first quarter, rookie groups Bonexdo and Tours also showed growth exceeding expectations in the second quarter. Researcher Lim said, "Although the operating profit margin is decreasing in the short term due to the expanding sales proportion of rookie groups, considering the current growth trend of rookies, future growth potential is expected to expand. From 2025, significant sales growth is anticipated with the full comeback of BTS and growth of low-experience intellectual property (IP)."