Samsung Securities said HYBE is expected to post second-quarter results that beat market expectations, helped by BTS' return to activities and growth by rookie artists. It projected that operating profit will more than double from a year earlier as concerts, albums and merchandise (MD) businesses grow evenly.
On the 2nd, Choi Min-ha, an analyst at Samsung Securities, maintained a "buy" rating on HYBE and cut the target price to 330,000 won from 380,000 won. However, Choi expected second-quarter results to be at the top end of the market consensus.
Samsung Securities estimated HYBE's second-quarter consolidation revenue at 1.2895 trillion won and operating profit at 152.0 billion won. That would be up 82.7% and 130.8%, respectively, from a year earlier.
It said BTS and rookie artists together will drive the improvement. In addition to new releases by major artists, extra BTS vinyl (LP) releases and multiple-version albums from Cortiz have propelled album sales, and the global streaming performance of BTS' new song "Come Over" and KATSEYE is also expected to be reflected. The concerts institutional sector is likewise expected to see strong growth, with a BTS world tour starting in Korea and North America, plus online concerts and live viewing.
Looking ahead, the growth of lower-tenure artists is expected to underpin earnings. Cortiz has surpassed 2 million in sales for its second album and is set for its first solo tour less than a year after debut. KATSEYE is also expanding its global footprint as new songs continue to enter the Billboard Hot 100, and in the third quarter it plans to broaden its stage to Europe with a new release and a second tour.
Choi said, "We focus on the steep growth of lower-tenure artists led by Cortiz and KATSEYE," adding, "In the second half, a girl group under the new label ABD and the debut of HYBE UMG's four-member global girl group 'Saint Satine' are also planned, so the artist lineup is expected to be further strengthened."
However, the target price was revised down to 330,000 won. This is not due to a slowdown in results but because the valuation of labels was lowered in the process of calculating using a sum-of-the-parts (SOTP) approach by business institutional sector. Samsung Securities maintained its previously positive view on HYBE's mid- to long-term growth.