DS Investment Securities said on the 20th that with BTS' return this year, the revenue contribution from high-vintage, low-vintage, and overseas intellectual property (IP) is set to grow, making earnings improvement likely. The firm raised its target price to 450,000 won from 400,000 won and maintained a buy rating. HYBE's previous trading day closing price was 366,500 won.
HYBE's fourth-quarter revenue last year is projected at 708.7 billion won, down 2% from a year earlier, with operating profit plunging 96% to 2.5 billion won, below market expectations (operating profit 21.6 billion won).
Jang Ji-hye, an analyst at DS Investment Securities, said, "Albums and digital tracks are expected to grow quarter over quarter on the back of new releases from Bonedo, TWS, LE SSERAFIM, and ILLIT, and follow-up sales of Cortiz released in the previous quarter, but there is a high base burden from the same period a year earlier."
As for concerts, there were performances by &TEAM, SEVENTEEN, TOMORROW X TOGETHER, and KATSEYE, but compared with BTS, ENHYPEN, TWS, and LE SSERAFIM in the previous quarter, the schedules were smaller in scale, so revenue is expected to decline quarter over quarter. Jang said, "Despite top-line growth, expense pressure is likely to increase due to costs related to restructuring the U.S. subsidiary, Latin IP development, and weak game results, hurting profitability."
This year, however, could be different. The release of BTS' new album on Mar. 20 and global concert results starting in April are expected to expand operating leverage, and beyond mega IP, growth is anticipated from high-vintage, low-vintage, and overseas IP.
Jang said, "With a large-scale tour schedule, BTS' contribution to results this year and next will expand further," adding, "Assuming concert revenue of 1 trillion–1.1 trillion won and MD revenue of 400 billion won this year, BTS would contribute more than 1.5 trillion won in sales and around 300 billion won in operating profit to HYBE."
He added, "We applied a valuation that reflects the 'uncharted path' of K-pop," naming HYBE as the top pick in the sector.