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HYBE (Photo courtesy of HYBE) |
[Alpha Biz= Ellie Kim] Kiwoom Securities lowered its target price for HYBE by about 18% on April 30, citing margin pressure from higher artist royalty expenses.
Analyst Lim Soo-jin said that despite high-margin sales such as albums and merchandise accounting for around 80% of revenue in Q1, HYBE’s gross profit margin (GPM) was limited to 43% as increased royalty rates—following BTS’s contract renewal—were reflected in cost of sales.
Kiwoom cut its target price from KRW 450,000 to KRW 370,000, while maintaining a “buy” rating. It also revised down its annual adjusted operating profit estimate to KRW 463 billion, factoring in a more conservative outlook for profitability as concert revenue grows in the second half.
HYBE previously reported a consolidated operating loss of KRW 196.6 billion for Q1, compared with a profit a year earlier, while revenue rose 39.5% year-on-year to KRW 698.3 billion. The loss was largely due to a one-off accounting cost of KRW 255 billion tied to employee compensation following a share donation by Chairman Bang Si-hyuk.
Excluding this non-cash expense, adjusted operating profit stood at KRW 58.5 billion, beating market expectations, according to the analyst.
Revenue growth was driven by strong album sales—including high-priced LP releases by BTS—and content-related income such as live-streamed concerts in Gwanghwamun and a Netflix documentary.
Looking ahead, Kiwoom expects HYBE to enter a high-growth cycle from Q2, supported by BTS’s world tour resumption and increased overall artist activity. The firm also noted stable earnings visibility from major IPs such as BTS, Seventeen, and Tomorrow X Together, along with rising momentum from newer acts.
Alphabiz Ellie Kim 인턴기자(press@alphabiz.co.kr)
