[Click eStock] "HYBE Lowers Sales Forecast Due to BTS Full Group Hiatus"…Target Price Down

Group BTS (Bangtan Sonyeondan). Photo by BigHit Music [Image source=Yonhap News]

[Asia Economy Reporter Lee Jung-yoon] Hyundai Motor Securities on the 16th lowered the target price for HYBE by 29% from the previous level to 285,000 KRW, stating that it has become virtually difficult to hold a tour in the second half of this year as the boy group BTS declared a shift from full-group activities to individual activities.

Following BTS's announcement of transitioning to individual activities, HYBE's stock price plunged 24.87% the previous day. Expectations had been for a global tour in the second half of the year and a special album with full-group activities before the military hiatus. However, the announcement of the system change six months earlier made a performance gap in the second half inevitable, causing investment sentiment to freeze sharply. A large-scale global tour centered on the fourth quarter was expected to attract 600,000 attendees within the year, but with the lowered likelihood of the tour, related sales of 200 to 250 billion KRW are judged to require immediate downward revision.

HYBE's second-quarter earnings were forecasted to set a record high. Sales were expected to increase by 87.1% year-on-year to 518.2 billion KRW, and operating profit was projected to rise 194.2% to 82.4 billion KRW. The surge in sales was due to the consecutive hits of BTS's new release in June, SEVENTEEN and TXT's new releases in May, and LE SSERAFIM's debut album, with total company-wide album sales expected to reach 8.75 million units for the quarter. Performances such as BTS's April concert in Las Vegas, USA, and SEVENTEEN's May fan meeting at Saitama Arena in Japan were also reflected. Unless there are major surprises, second-half earnings are expected to decline by double digits compared to the same period last year, and next year's performance direction will be determined by BTS's solo and unit activities as well as the growth of SEVENTEEN and TXT.

However, the performance gap due to BTS's military enlistment is judged not to be as excessive as the market fears. Hyundai Motor Securities researcher Kim Hyun-yong said, "In terms of albums, it is possible to cover more than 8 million units annually just by combining unit and solo activities, covering over 90% of last year's sales," adding, "Although it is too early to calculate the coverage ratio for performances at this point, considering the global attendance power of Big Bang's solo members (G-Dragon, Taeyang, Daesung), which totaled 960,000 in 2017, it is estimated that BTS's solo and unit tours will have even greater impact."

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