[Click eStock] "HYBE Ends BTS Military Service Issue... Uncertainty Removed"

Yuanta Securities Report

[Image source=Yonhap News]

[Asia Economy Reporter Myunghwan Lee] Jin, the eldest member of the group BTS, has made a sudden announcement about his military enlistment, leading securities firms to evaluate that the uncertainty surrounding their agency HYBE has been resolved.

On the 18th, Yuanta Securities stated, "It is judged that a decision was made to reduce the group's activity hiatus and to resume full-group activities quickly." Along with this, they maintained a 'buy' rating on HYBE but lowered the target price from the previous 252,000 KRW to 210,000 KRW, citing that the target price estimation period has been postponed to 2024.

The day before, Big Hit Music, BTS's agency, announced on the 17th, "Jin has applied to cancel his enlistment postponement at the end of this month and will follow the Military Manpower Administration's enlistment procedures thereafter," adding, "Other members will also fulfill their military service sequentially according to their individual plans." Born in 1992 and aged 30, Jin had his enlistment postponed until the end of this year under the revised Military Service Act of 2020, based on a recommendation from the Minister of Culture, Sports and Tourism.

Accordingly, it is expected that BTS members will release solo albums until the first half of 2023. Since the members have expressed their hope to resume full-group activities in 2025, Yuanta Securities analyzes that there will be an approximately 18-month hiatus in BTS activities from the second half of 2023 to the end of 2024.

Except for Jin, who decided to enlist this time, the other members will not enlist in 2023 and can postpone their enlistment from 2024 up to 2027 according to their birth years. Nevertheless, Yuanta Securities assessed that the decision was made to reduce the group's activity hiatus and to resume full-group activities quickly.

Yuanta Securities evaluated that this decision has removed the uncertainty regarding BTS's military enlistment timing and activity plans, which had been a factor in HYBE's stock price decline this year. Researcher Hyein Lee from Yuanta Securities said, "The most important point is that assumptions about BTS's military enlistment timing are no longer necessary, providing visibility into the 2023-24 performance," adding, "The 2023 performance has more potential for growth than risk of decline."

Yuanta Securities cited factors that could act as variables for upward revisions of HYBE's performance, including the faster-than-expected growth of several artists besides BTS and the introduction of a paid revenue model on the global fandom platform 'Weverse.'

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