[Click eStock] "BTS Comeback... HYBE Expected to Deliver Strong Results Despite Short-Term Weakness"

IBK Investment & Securities has lowered its target price for HYBE from 4.8 million won to 4 million won, while maintaining its buy recommendation.

On April 22, Yoo Hyuk Kim, a researcher at IBK Investment & Securities, stated, "We have reduced the target price-to-earnings ratio (PER) from 45 times to 40 times due to the sector's valuation decline."

HYBE's operating profit for the first quarter of this year is expected to reach 3.99 billion won, which is below the market consensus of 4.3 billion won. Kim explained that while album sales driven by BTS's comeback and tour performances by Seventeen and others are reflected in sales, higher-than-expected costs related to the BTS comeback and an increase in settlement rates following BTS's third contract renewal led to a higher cost ratio, which is the main reason for the results falling short of market expectations.

Starting from the second quarter of this year, performance is expected to improve significantly, with operating profit forecast to reach 18.06 billion won. Revenue from the BTS world tour, which began on April 9, has contributed to this improved performance. Kim analyzed, "Even after accounting for the increased settlement rate due to the BTS contract renewal, it is fully feasible for the operating profit contribution to exceed 12 billion won."

Kim further stated, "The BTS 'THE CITY ARIRANG' project is being held in Seoul, Busan, and Las Vegas in the United States, which is driving growth in popup merchandise sales, and upward revisions to estimates are fully possible through online streaming of concerts in Seoul and Japan." He added, "It is also positive that most of the company's artists, including Cortiz, TXT, Le Sserafim, and ILLIT, are scheduled for comebacks in the second quarter of this year."

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