BTS Announces Indefinite Hiatus

The author is an analyst of KB Securities. She can be reached at leesunhwa@kbfg.com. -- Ed.  

 

BTS announces indefinite hiatus

— On Jun 14, BTS announced an indefinite hiatus via their FESTA dinner video on their YouTube channel, BANGTANTV.

— Following the release of their anthology album, Proof, on Jun 13, members will be engaging in solo activities.

— The change in the band’s direction seems to have come after their world tour—ensuing the release of their fourth album Map of the Soul (released in February 2020)—was cancelled amid the pandemic.

— Members also mentioned the that they have been experiencing lack of time for personal development following the release of their first English single “Dynamite” (released August 2020), which went on to top the Billboard Hot 100 chart, and the subsequent successes of “Butter” and “Permission to Dance.” 

BTS to evolve from idols to artists

— Lyrics in “Yet to Come,” the lead single of Proof, imply that the band has been preparing to evolve from idols into artists.

— The band’s activity in support of Proof is likely to be the final chapter of the idol era.

— The band has upcoming concerts in Seoul (with all members scheduled to perform), but plans for their world tour (slated to begin after 2H22) are now up in the air.

— Jin, the oldest member of the group, will likely be called upon to enlist for mandatory military service within the year, followed by RM and Suga. 

— However, J-Hope is scheduled to perform solo at Lollapalooza in July and release a physical album, and the youngest member Jungkook is also in the midst of preparing for the release of a physical album.

— Growth in album sales should continue thanks to the band’s dedicated following, loyal enough to ensure over 1mn in just solo album sales, as well as the development of other artists. 

Indefinite hiatus, uncertainties regarding world tour warrant earnings estimate revisions

— Our estimate for HYBE’s 2022 OP currently stands at KRW316.0bn, but is likely to be subject to downward revision in light of the indefinite hiatus by BTS, as well as uncertainties regarding the band’s world tour.

— The downward revision to OP would boost 2022E P/E higher than the current 37x (based on Jun 14 closing price); valuation multiples are likely to remain high for the time being. 

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