Growth Engines Finally Confirmed
The author is an analyst of NH Investment & Securities. She can be reached at hzl.lee@nhqv.com. -- Ed.
HYBE’s girl group NewJeans looks set to enter the Billboard Hot 100 chart—a feat which signifies undeniable robust fandom in combination with measurable popularity in the West. At HYBE, the absence of BTS group activities is being outweighed by strong newcomers and promising new businesses.
Growth engines finally confirmed
We maintain a Buy rating and TP of W250,000 on HYBE, presenting it as our sector top pick.
Main business: Despite the absence of BTS group activities due to members’ sequential military enlistment, we favorably note that: 1) members’ solo activities are filling the void; and 2) non-BTS lineups are continuing to perform well. In particular, all three groups that debuted last year (ie, Le Sserafim, NewJeans, &TEAM) are registering successful results. At HYBE, the presence of hit lineups is confirmed to remain after BTS, thanks to the firm’s differentiated artist-production capabilities.
Platform: With the integration with V Live now complete, the numbers of artists under other entertainment companies and users are ramping up significantly. The monthly subscription service, which was tested with the NewJeans exclusive platform ‘Phoning’ in December, is expected to be applied to the entire Weverse platform in 2Q23.
NewJeans to enter Billboard Hot 100 just six months from debut
NewJeans is expected to enter the Billboard Hot 100 singles chart with their new song Ditto. Of note, while it has been only six months since the group’s debut, initial album release effects are no longer the main driver of the group’s popularity. Unlike the Billboard 200 album chart, where K-pop artists frequently appear, the Hot 100 is harder to crack, as it requires strength across several indicators such as streaming, sales, and radio airplay. Given that the starting point for Blackpink’s public awareness in the US was the appearance of Ddu-du Ddu-du on the Hot 100 in 2018, expectations for a ranking by NewJeans is noteworthy.
4Q22 preview: Disappointing tour profitability vs success of new albums
HYBE is to book consolidated 4Q22 sales of W400.8bn (-12% y-y) and OP of W50.4bn (-32% y-y), slightly missing consensus. Unlike the BTS LA tour in 4Q21, the Seventeen Asia tour registered low profitability due to frequent city movements and smaller audiences. However, we draw attention to overall brisk sales of new albums: Jin (solo, 1mn copies), RM (solo, 0.75mn), Le Sserafim (mini, 0.75mn), and Seventeen (Japan, 1mn).