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Key drivers: NewJeans, BTS, and Katseye

HYBE is trading at a record-low 12-month forward P/E of 32x. However, we expect valuation to recover going forward, supported by: 1) the dissipation of NewJeans-related risks; 2) BTS’s comeback; and 3) Katseye’s debut.

1) NewJeans

By far the most important share price variable is whether NewJeans will be able to continue its activities. We see three scenarios for how the infighting between HYBE and subsidiary Ador could end: 1) NewJeans remains under HYBE and continues its activities; 2) the group discontinues its activities; or 3) the group pays a penalty and parts ways with HYBE. We think only the first and third scenarios seem plausible. Under the first scenario, we assume that NewJeans’ activities would be unchanged before/after the infighting. Under the third scenario, we estimate that HYBE would recognize net revenue of W400bn or more (without additional costs).

2) BTS’s comeback

The day after his discharge from the military, Jin (BTS’s oldest member) will resume his activities with a fan meeting event. With Jin’s discharge, we expect to see increased engagement from BTS fans around the globe. And for BTS’s first full post-discharge comeback (expected in 2H25), we conservatively estimate album sales at 5mn copies and concert revenue at W293bn (or 10mn copies and W492.8bn under more aggressive assumptions).

3) Potential success of Katseye

The performance of Katseye (whose debut could be delayed from June to July) should have a significant influence on the direction of HYBE’s valuation; if the group is successful, HYBE will likely establish itself as a key player in the global music industry and a model for global peers struggling with the decades-long stagnation in the music market. This would make HYBE well-positioned to export its artist production system and social relations-based fan management models to other global music players.