[Click eStock] "HYBE, Abundant Momentum... Target Price Up"

Target Price Raised from 270,000 KRW to 300,000 KRW

On the 26th, KB Securities raised the target price for HYBE from 270,000 KRW to 300,000 KRW, citing abundant momentum such as the full comeback of BTS this year. The investment rating was maintained at 'Buy.'

Lee Seonhwa, a researcher at KB Securities, stated, "There is abundant momentum including BTS's full comeback this year, expansion of major artists' concert scales, the start of world tours by newer artists, diversification of revenue models on the Weverse platform, and expansion of AI voice services. Additionally, HYBE is free from U.S. tariff issues and is expected to benefit from the lifting of China's ban on Korean entertainment. Accordingly, the main reason for the target price increase is the upward revision of operating profit estimates for 2025 and 2026 by 6.4% and 11.2%, respectively."

HYBE's consolidated sales for Q4 last year increased by 19.2% year-on-year to 725.3 billion KRW, while operating profit decreased by 26.7% to 65.3 billion KRW, falling short of the consensus operating profit estimate of 83.1 billion KRW. The researcher analyzed, "Due to active artist activities, sales exceeded market expectations, but the increase in sales cost was caused by a higher proportion of artist direct participation revenue. Additionally, in the peak season of Q4, the increase in performance bonus distribution led to higher labor costs, and outsourcing costs, estimated to be related to lawsuits involving ADOR, also increased, which contributed to the earnings shock."

Last year, BTS solo activities were absent due to all members serving in the military, but this year, with members Jin and J-Hope discharged, solo activities have begun, raising expectations for a full group comeback in the second half of the year. The researcher predicted, "When BTS resumes full group activities, an improvement in operating profit margin through economies of scale is expected. Major artists such as Seventeen, ENHYPEN, and TXT are expected to expand their tour scales this year based on their solid global fandoms, and newer artists like LE SSERAFIM and Boy Next Door have secured setlists, making world tours possible." Regarding Weverse, the free service of the new digital membership introduced in Q4 last year ended, contributing to this year's performance, and the launch of a new service where fans and artists listen to music together is expected to improve profitability. The researcher added, "Major subsidiaries that have focused on investments in gaming and AI voice are expected to enter a harvest period this year."