SK Securities reported on September 22 that HYBE is expected to exceed market forecasts due to the resumption of BTS activities and the performance contributions from lower-tier intellectual properties (IPs). However, the firm emphasized that reducing its high dependence on BTS is crucial, lowering its target price from 350,000 won to 290,000 won while maintaining a 'buy' rating.
Park Jun-hyung, a researcher at SK Securities, stated in a report, "HYBE's high reliance on a single IP necessitates securing new IPs to mitigate this dependence. However, the solution also stems from owning mega IPs."
He added, "Agencies with artists of BTS's caliber have an advantage in negotiations with local promoters and venues when scheduling global tours. Additionally, the success of the localized model with 'Cat's Eye' has validated their capacity to nurture further localized IPs, making them the strongest among the four companies in terms of lower-tier pipelines."
Regarding performance, he noted, "In the third quarter, ticket sales per show are expected to rise significantly due to a concentration of performances in North America and Europe, while initial fixed costs, such as stage production expenses, have already been incurred. The expansion of profit margins due to revenue growth is expected to offset the margin decline seen in the second quarter."
For the second half of the year, a decline in revenue is anticipated due to a hiatus in BTS activities, but profitability is expected to improve. Park stated, "While the lack of a publicized activity plan for BTS in the second half makes a revenue decline inevitable, the reduction in sales from mega IPs with high settlement rates and the increased share of lower-tier IPs are expected to enhance operating profit margins. This indicates a period where the quality of profits is improving despite a decrease in revenue."
* This article has been translated by AI.
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