iM Securities on the 10th said HYBE is expected to restore its operating margin to the 10% range next year. It maintained a "Buy" rating and a target price of 400,000 won, and continued to present it as the top pick in the sector. HYBE's previous day's closing price was 291,000 won.
iM Securities projected HYBE's 2026 operating profit at 514.9 billion won, up 622% from a year earlier, and said the operating margin would recover to the 10% range.
Hwang Ji-won, an analyst at iM Securities, said, "With BTS set to return as a full group next year, the most likely activity schedule now is to release a new album in March and then launch a world tour from April," adding, "We expect to draw about 3.5 million to 4 million attendees, and average ticket prices (ATP) are likely to rise on the back of a higher share of North America and Europe shows and deferred demand."
Announcements on the new album release and world tour are expected early in the year. Considering the scale of the tour to be announced, structural growth in the MD division, strong sales of albums and digital music, and robust online live-streaming revenue, there may be additional upside to earnings.
Hwang said, "Given the leverage effect from the resumption of a large-scale BTS tour and the full-fledged monetization of mid- to lower-tenure artists, including locally localized groups overseas, we recommend continuously increasing positions at the current share-price level."
However, while performance- and MD-based revenue is at an all-time high, operating profit remains weak. In the third quarter of this year, it posted its first quarterly loss since listing. iM Securities said this was due to one-off expenses from restructuring the U.S. subsidiary's business and concentrated investment expenses for new artists.
Hwang said, "In the fourth quarter as well, with remaining expenses related to the U.S. subsidiary and a Latin boy group and game expenses reflected, the short-term improvement in profitability is expected to be limited."
Still, it assessed that the effects of preemptive investment are clear. Hwang said, "Rookie group Cortiz surpassed 1 million in cumulative sales of its debut album, and its monthly listeners on Spotify rank fourth among boy groups, with fandom expansion very steep in key markets," adding, "KATSEYE ranked No. 31 on the Billboard Hot 100 and No. 4 on the Billboard 200 in its second year since debut and is on its first North American tour."
Given that K-pop groups showing similar metrics can all conduct stadium tours in the United States, next year they are expected to expand to arenas that can accommodate 10,000 to 20,000 people and, as early as then, to domes that can hold more than 30,000.
Hwang said, "Also, given the characteristics of U.S. artists, they are more likely to focus on tour-centered activities, so we can assume more show dates compared with domestic artists."
HYBE plans to debut one team in Korea and one to two teams in the United States next year.