[Click eStock] HYBE Without BTS 'Target Price Downgrade'... Mid- to Long-Term Expectation for Weverse Value Enhancement

[Image source=Yonhap News]

[Asia Economy Reporter Lee Seon-ae] DB Financial Investment announced on the 4th that it maintains a buy rating on HYBE but has lowered the target price from 220,000 KRW to 160,000 KRW. The target price is based on a 2023 expected earnings price-to-earnings ratio (PER) of 33 times, with the multiple significantly lower than the company's historical average. The absence of BTS and lowered expectations for Weverse traffic are reasons for the target price downgrade.

Hwang Hyun-joon, a researcher at DB Financial Investment, explained, "The target price was lowered considering the market situation without BTS. However, due to steady artist album sales, normalization of performances, and strengthening of the rookie lineup, solid earnings momentum is expected to continue. The fandom platform business still requires monitoring of its performance, so the buy rating is maintained."

In the third quarter of this year, sales and operating profit increased by 84% and 215% year-on-year to 445.5 billion KRW and 88.3 billion KRW, respectively, in line with the consensus (average securities firm forecast) of 403.7 billion KRW in sales and 57.0 billion KRW in operating profit. With the addition of Seventeen, TXT, and NewJeans, album sales remained strong, and concert sales reached 47.2 billion KRW, reflecting performances by TXT and Seventeen.

Indirect participation-type sales driven by the existing lineup also increased by 35% year-on-year, leading top-line growth. Profitability declined due to a rise in cost ratio caused by an increase in offline performances.

Researcher Hwang said, "The selling power of Seventeen and TXT is strengthening, and new girl groups like NewJeans are quickly establishing themselves," adding, "Meanwhile, it is necessary to monitor trends in monthly active users (MAU) and performance of the integrated Weverse and V Live app."

He continued, "The average MAU in the third quarter was 7 million, showing a slower increase than expected but still an upward trend. The enhancement of services and expansion of artists joining the platform are still considered mid- to long-term positive factors for Weverse's value."

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