Kiwoom Securities Cuts HYBE’s Target Price by 18% to Reflect Impact of BTS Royalty Rate

HYBE, poised to announce first-quarter 2026 earnings, signals entry into a “high-growth cycle” after overcoming “operating loss”
Amid analyses that concerns about profitability were already priced in, HYBE highlights valuation appeal by putting front-and-center key artists such as “BTS”

“Kiwoom Securities” cuts HYBE’s target price to 370,000 won… keeps the investment view as “Buy”

“Kiwoom Securities” has abruptly adjusted its target price for domestic entertainment leader “HYBE” downward from the prior 450,000 won to 370,000 won, by roughly 18%. The result of a sober analysis is that a rise in the royalty rate tied to key artists’ contract renewals—such as “BTS”—will weigh on future profitability. That said, factoring in long-term growth value, the firm firmly kept its investment view as “Buy”.

Good news and bad news for first-quarter results: one-time costs and “adjusted operating profit”

According to a report released on the 30th, this year’s first-quarter “HYBE” revenue mix with high margins was close to 80%. However, as the artists’ royalty rate began to be fully reflected in the cost of sales, gross profit margin (GPM) remained at 43%. “Kiwoom Securities”, considering that the share of performance revenue is expected to expand in the second half, reassessed the profitability structure conservatively and lowered its annual estimate for “adjusted operating profit” to 463 billion won.

Earlier, “HYBE” officially announced that it recorded “operating loss” of 196.6 billion won on a consolidated basis in the first quarter, turning into a loss compared to the previous year. This is because one-time costs totaling a staggering 255 billion won—such as executive compensation stemming from Chairman “Bang Si-hyuk”’s personal-share gift—were reflected all at once. On the other hand, revenue for the first quarter came in at 698.3 billion won, surging 39.5% year over year.

Exceeds market expectations—strong defense of “core IP”

Despite the headline loss, “Kiwoom Securities” calculated “adjusted operating profit” at 58.5 billion won after excluding one-time costs. This is assessed as a strong result that tops market expectations, given that no actual net asset outflow occurred. In particular, notable growth across diversified content—such as a strong performance in high-priced LP album sales from “BTS” and Netflix documentary releases—strongly drove overall revenue.

Entering a “high-growth cycle” in the second quarter… global leap for rookie IP

• “BTS” resumes its world tour and launches large-scale global projects

• “SEVENTEEN”, “TOMORROW X TOGETHER”, and other major “intellectual property” activities concentrated

• “TWS” and “KATSEYE” achieve top-tier indicators globally for new IP

From the second quarter onward, “HYBE” is expected to enter a full-fledged “high-growth cycle”. “Kiwoom Securities” assessed that concerns about a higher royalty rate have already been sufficiently priced in to the current stock price. Considering the overall picture—especially the overwhelming performance-defense power of core “intellectual property” and the steep growth trajectory of rookie artists—this moment is, rather, the period where “valuation appeal” is highlighted most strongly.