Hana Securities evaluated on the 26th that this year, the group BTS will make a comeback and sales in the new growth institutional sector will begin to intensify, resulting in an improvement in profit margins. It maintained its investment opinion of 'Buy' and its top pick recommendation. The target stock price was raised by 11% from 280,000 won to 310,000 won. HYBE's previous day closing price was 251,000 won.
HYBE's sales for the fourth quarter of last year amounted to 725.3 billion won, a 19% increase compared to the same period the previous year. Operating profit decreased by 2% to 65.3 billion won compared to the same period the previous year. This fell below the consensus of securities company estimates. Research Institute Lee Gi-hoon noted, 'On an annual basis, the revenue share for BTS has dropped below 20% due to military service, but it recorded the all-time highest sales.' He added, 'Albums sold over 11 million copies as most artists, including Jin (BTS), SEVENTEEN, TXT, and ENHYPEN, made comebacks. Additionally, as approximately 1 million attendees participated in the tours of SEVENTEEN, ENHYPEN, and TXT, related merchandise sales showed strong performance.'
However, it was analyzed that operating profit was affected by a decrease in concert profit margins and increased labor costs such as stock compensation expenses, while non-operating factors like amortization expenses related to Ithaca remained high, leading to disappointing profits.
The research institute expressed expectations for BTS's full-group comeback this year and predicted that HYBE's profit margins will improve. He noted, 'In the past, the stock price or valuation of groups Dongbang and BIGBANG sharply increased around their discharge from military service, and the recent stock performance shows a very similar trajectory.' He explained, 'In recent months, the stock price has risen by over 50%, approaching an expected price-to-earnings ratio (PER) of about 40 times for 2024, which may lead to concerns about short-term stock price levels, but a steep upward revision in earnings per share (EPS) is expected in the second half of the year.'
In an analysis, it is expected that if the $3 million monthly world tour announcement reflecting BTS's revenue happens in 2026, with the current exchange rate level (about 1,400 won) continuing, the projected annual operating profit will approach 500 billion won. Research Institute Kim explained that this indicates a potential increase in market capitalization of about 15 trillion won (operating profit of about 30 times) or a stock price nearing approximately 350,000 won. He also noted, 'Recently, the stock price has shown significant increases each time Stray Kids, J-Hope, and BLACKPINK announced North American tours, which adds anticipation for BTS's tour announcement later this year.'
Continuing, the research institute remarked, 'Last year, due to the absence of the full group BTS, various expenses were proactively incurred in multiple institutional sectors to facilitate regional expansion in the U.S. and Latin America and to broaden the portfolio in new growth sectors like games and AI.' He expects that 'this year, with BTS's comeback and sales in the new growth institutional sector gaining momentum, profit margins will improve.'
He also noted, 'Through strengthened management in Ithaca, the scale of the large-scale amortization expenses incurred annually is expected to decrease,' adding, 'In the next two years, a total of 10 boy groups are set to debut in Korea, Japan, the U.S., and Latin America.'