MERITZ Securities analyzed on the 7th that profitability pressure is likely to continue until BTS resumes activities in the first half of next year regarding HYBE. It maintained a target price of 370,000 won and an investment opinion of 'buy.' The closing price of HYBE on the previous trading day was 259,000 won.
In the second quarter of this year, HYBE recorded consolidated revenue and operating profit of 705.6 billion won and 65.9 billion won, respectively. This represents an increase of 10.2% and 29.4% compared to the previous year. The operating profit slightly fell short of the securities market's estimate of 67.6 billion won.
Despite the major artist comebacks, profitability struggles persisted due to the debut expenses of the Japanese boy group AOEN and the production costs of the Latin boy band audition program 'Pasea La Palma.' Revenue from albums has been reflected from BTS Jin, SEVENTEEN, TXT, and ENHYPEN, while concerts included approximately 1 million attendees from BTS J-Hope, TXT, and LE SSERAFIM's world tours. Merchandise and licensing revenues reached 152.9 billion won, a 40.2% increase compared to the previous year, bolstered by strong sales of concert merchandise like light sticks and character products.
MERITZ Securities projected that HYBE's consolidated operating profit for this year and next year would be 183.2 billion won, down 0.9% from the previous year, and 466 billion won, up 154.4%, respectively.
Kim Min-young, a researcher at MERITZ Securities, noted, 'The resumption timeline for BTS activities has been announced for the first half of next year, and downward adjustments of this year's estimates are inevitable due to higher-than-expected investment expenses,' but added, 'The fact that BTS and CAT's EYE Spotify monthly listeners have surpassed 28 million and 24.5 million, respectively, is encouraging.'
Especially regarding CAT's EYE, Kim explained, 'CAT's EYE has reached a level similar to BTS's Spotify monthly listeners in just one year since their debut, indicating that the U.S. music market is vast and showing CAT's EYE's explosive growth.'
He continued, 'Although profitability pressures, such as the debut of a new group from Big Hit within the year and the production costs of the Latin boy band and groups, will persist, expectations will continue to rise in the second half of the year as the resumption of BTS activities and the monetization from the growth of individual intellectual properties (IPs) are anticipated.'