[Click eStock] "HYBE, Assuming BTS Military Enlistment... Target Price Down 16%"

[Image source=EPA Yonhap News]

[Asia Economy Reporter Kwon Jae-hee] Hana Financial Investment maintained a 'Buy' rating on HYBE on the 15th, but lowered the target price by 16% from the previous level to 360,000 KRW.

HYBE's stock price has been significantly adjusted due to the macro environment, uncertainties related to the military enlistment of the boy group BTS (Bangtan Sonyeondan), and the absence of announced tour schedules despite their comeback.

Hana Financial Investment projected operating profits for 2023 and 2024 at approximately 200 billion KRW and 370 billion KRW, respectively, under a conservative scenario.

The issue of the Military Service Act amendment allowing alternative service for popular culture artists was expected to be resolved within April but has been prolonged. Not only the exemption status but also the timing and method of the members' enlistment remain uncertain. Accordingly, Hana Financial Investment estimated performance assuming the members enlist, forecasting a performance gap in 2025-2026 when four members are expected to enlist. The most conservative scenario assumes all members enlist at the beginning of 2023, estimating a BTS-related revenue decrease of about 750 billion KRW in 2023, with approximately 500 billion KRW from albums and tours, and about 250 billion KRW from indirect sales such as MD (merchandising).

Reflecting this, the expected sales and operating profit for 2023 are estimated at 1.6 trillion KRW and 200 billion KRW, respectively. The expected sales and operating profit for 2024 are 2 trillion KRW and 370 billion KRW, and for 2025, 2.6 trillion KRW and 500 billion KRW, respectively.

Lee Ki-hoon, a researcher at Hana Financial Investment, stated, "The military enlistment issue of BTS is the most important factor. Assuming the most conservative scenario in terms of performance, the operating profit for the third quarter of this year is revised down from the previous 99 billion KRW to 71 billion KRW," adding, "The target price is also lowered to 360,000 KRW, reflecting the valuation downgrade."

This content was produced with the assistance of AI translation services.