sign in sign up
<<
Home , AleXa, Bailando 2021, Jellyfish Entertainment, Pinkfong, Weverse, Yungblud

[Korea] Entertainment April 6, 2021

HYBE Corporation Buy (352820 KS ) (Initiate)

Evolving into a major platform player TP: W340,000 Upside: 37.1%

Mirae Asset Securities Co., Ltd. -yeob Park [email protected]

Valuation and recommendation Initiate coverage with Buy and TP of W340,000 ó We derived our target market value of W13tr for HYBE Corporation (HYBE; formerly Big Hit Entertainment) by applying a P/E of 60x to our 2021-22F average net profit attributa ble to owners of the parent (W218.6bn). ó Our target multiple stems from our view of HYBE as the leading fan platform provider (with direct and indirect access to top global artists). ó Post-IPO, HYBE has traded at between 27x and 45x P/E (20% premium to the upper band of the three major domestic entertainment stocks). In our view, a re-rating is due. ó The company has expanded its artist portfolio through partnerships with (UMG)/YG Entertainment and its 100% acquisition of Ithaca Holdings. This should allow it to further strengthen the market position of its platforms. Value of fan platform s to come Weverse/Weverse Shop: Millennials/Gen Z -driven platforms poised for exponential growth in into view profits and users ó In our view, the emergence of direct-to-fan platforms was inevitable, given the new normal of contactless interactions and the distinct content power/strong fan engagement of music. (Music channels account for 40% of YouTube traffic.) ó HYBE has brought platforms and labels into its fold at lightning speed, creating a sizable lead over potential competition in terms of technology and content. ó We believe Weverse will bring together previously fragmented fan monetization models and encourage spending by fans outside of Korea and Japan. ó Entertainment/content companies have raised their values through aggressive M&As. The cases of Nexon , Walt Disney, and point to the potential for additional M&A activit ies . Comparable to Nasdaq -listed 60x P/E is hardly a stretch platforms ó We believe Weverse can be compared to Nasdaq-listed social network/content platforms, as they share in common several advantages—e.g., user-generated content, a traffic-utilizing commerce business model, and strong user engagement. ó Comparisons with leading platforms based on per-user market cap/revenue and valuation indicators (2021F P/S and P/E ratios) suggest the stock has more than 30% upside potential. ó In the long term, we believe the company’s value will be tied to its ability to establish a firm footing in the market as a new platform. Earnings normalization is near ó For 2021, we expect operating profit of W232.5bn. With the resumption of artist activities (live performances, etc.), the ratio of direct to indirect revenue should converge to 50:50.

Key data

Current price (4/5/21, W) 248,000 Market cap (Wbn) 8,835 160 HYBE KOSPI 140 OP (21F, Wbn) 232 Shares outstanding (mn) 36 120 Consensus OP (21F, Wbn) 246 Free float (%) 40.0 100 EPS growth (21F, %) 56.4 Foreign ownership (%) 7.8 80 P/E (21F, x) 55.8 Beta (12M) 1.51 60 40 Market P/E (21F, x) 14.0 52-week low (W) 142,000 3.20 7.20 11.20 3.21 KOSPI 3,120.83 52-week high (W) 258,000

Share performance Earnings and valuation metrics (%) 1M 6M 12M (Dec.) 2017 2018 2019 2020 2021F 2022F Absolute 19.5 0.0 0.0 Revenue (Wbn) - 301 587 796 1,115 1,748 Relative 15.9 0.0 0.0 OP (Wbn) - 80 99 146 232 384

OP margin (%) - 26.6 16.9 18.3 20.8 22.0 NP (Wbn) - -70 74 86 160 277 EPS (W) - -2,559 2,601 2,843 4,446 7,587 ROE (%) - -80.8 56.5 12.5 12.6 18.5 P/E (x) - - - 56.3 55.8 32.7 P/B (x) - - - 4.8 6.7 5.5 Div. yield (%) - - - 0.0 0.0 0.0 Notes: Under consolidated K-IFRS; NP is attributable to owners of the parent Source: Company data, Mirae Asset Securities Research estimat es Analysts who prepared this report are registered as research analysts in Korea but not in any other jurisdiction, including t he US. PLEASE SEE ANALYST CERTIFICATIONS AND IMPORTANT DISCLOSURES AND DISCLAIMERS IN APPENDIX 1 AT THE END OF REPORT. April 6, 2021 HYBE Corporation

I. Valuation

Initiate coverage with Buy rating and TP of W340,000

We initiate our coverage on HYBE with a Buy recommendation and target price of W340,000. We derived our target market value of W13tr by applying a P/E of 60x to our 2021-22F average net profit attributable to owners of the parent (W218.6bn). We view HYBE as the industry’s leading fan platform provider with direct and indirect access to top global artists. Considering the value of the company’s direct-to-fan platforms, our target P/E of 60x looks undemanding. Since its listing six months ago, HYBE has traded at between 27x and 45x (12-month forward P/E basis), averaging a modest 20% premium to the upper band of the three major domestic entertainment stocks: YG Entertainment, JYP Entertainment, and SM Entertainment. Since 2010, amid significant changes in the industry (the growth of the Japanese live performance market, the accumulation of new artists, and the advent of global music/video platforms), the upper band of the three big entertainment stocks has averaged 35x.

In our view, a 20% premium does not adequately reflect the value of HYBE’s innovative platforms and extensive intellectual property (IP). Indeed, since early this year, HYBE has expanded its portfolio of global chart-topping artists through partnerships with UMG/YG Entertainment and its 100% acquisition of Ithaca Holdings. We also note that the company is gaining exclusive access to new business opportunities.

In our view, the emergence of direct-to-fan platforms was inevitable, given the new normal of contactless interactions and the distinct content power/strong fan engagement of music. (Music channels account for 40% of YouTube traffic and attract an exceptionally high number of comments.) To strengthen its lead over rivals in this growing segment, HYBE has brought platforms and labels into its fold and plans to increase fan monetization in new markets.

While there have been some doubts over whether top global platforms (NAVER, Kakao, Netflix, Walt Disney, etc.) represent a suitable peer group for HYBE, we expect such doubts to dissipate as the company further strengthens its lead in direct-to-fan platforms. In our view, a re-rating is due.

Table 1. HYBE: TP calculation (Wbn)

Valuation (P/E) 2020 2021F 2022F 2021-22F avg. Notes Target market value 13,118 13,118 13,118 13,118 No. of shares increased 8.7% due to rights offering NP 85 160 277 219 Target P/E 154.9 81.8 47.4 60.0 Global peer group P/E Fair price (W) 338,843 338,843 338,843 338,843 TP: W340,000 (37.1% upside) Note: Reflected increase in no. of shares due to rights offering Source: Mirae Asset Securities Research estimates

Table 2. Comparison of Weverse with other global platforms Platform Users Market 2021F Market cap Revenue 2021F 2021F Similarities with Weverse Company type (mn) cap (Wtr) revenue per user (W) per user (W) P/S (x) P/E (x) Fan - Weverse 35 8.7 1.2 247,331 34,626 7.1 49.6 community Social Content sourcing: Free user-generated content Facebook 2,797 960.1 121.7 343,268 43,495 7.9 24.5 networking Business model: Channeling user traffic to commerce sites 330 57.5 5.4 174,283 16,374 10.6 69.8 User demographics: Mostly millennials and Gen Zers Snap 265 92.8 4.3 350,122 16,222 21.6 1,702.8 Business model: ( Subscription fees ) - (fixed cost of content Content Netflix 204 269.7 33.8 1,324,286 166,158 8.0 50.9 production) ‰ Leverage Business model: ( Subscription fees ) - (platform/label profit Spotify 345 58.8 12.5 170,501 36,113 4.7 - sharing) ‰ Limited leverage Dating Value provided: Emotional satisfaction Match Group 67 43.3 3.2 646,537 47,704 13.6 63.7 Business model : Partial monetization Bumble 20 12.8 0.8 640,658 40,848 15.7 633.8 (tiered pricing depending on service ) Note: User count is based on MAUs (redundancies included) for HYBE ( + Weverse); MAUs for Facebook; 1Q19 MAUs (recent data not released) for Twitter; DAUs for Snap; paid subscribers for Netflix; subscribers for Match Group (Tinder); and MAUs for Spotify/Bumble. Source : Company data , Bloomberg , Mirae Asset Securities Research estimates

Mirae Asset Securities Research 2 April 6, 2021 HYBE Corporation

The Weverse platform gives music fans the unprecedented ability to communicate with each other and with artists; in this way, it seeks to encompass all fan activities and bring together previously fragmented fan monetization models. In this report, we compare Weverse with global platform providers Facebook, Twitter, Netflix, Spotify, and Match Group to identify similarities and evaluate the future of HYBE’s platform business.

1) Social networking platforms: Free user-generated content ‰‰‰ High margins and user loyalty

Weverse provides a space for fans to find and share information about their favorite artists. Users of the platform spend most of their time on community bulletin boards where fans post comments and images. As with Facebook and Twitter posts, the content is created voluntarily by users at no cost.

User-generated content (UGC) allows social networking platforms to secure high profits and user loyalty. Such advantages should persist as long as the users stay interested in the relevant subjects; in the case of Weverse, we see strong potential for long-term user loyalty.

2) Netflix and Spotify: Professionally produced content

Margins of content platforms tend to be lower than those of social networking platforms due to the cost of content production. Like content producers, HYBE also incurs costs for producing content (except for UGC).

Weverse has certain similarities with music/video streaming platforms in terms of revenue model. First, it shares profits with artists, similar to how Spotify shares revenue with music labels. Second, a portion of content production costs are fixed costs, as is also true for Netflix. As such, the extent of leverage effects enjoyed by HYBE should be somewhere between those seen by music and video streaming platforms.

3) Match Group: Users pay high fees in pursuit of emotional satisfaction

Match Group has acquired and operates a portfolio of dating/chatting app brands, including Tinder (no. 1 in the world), OkCupid, Hinge, Pairs, and Azar—each with unique qualities that allow the company to target markets segmented by age and region.

Users are willing to pay expensive fees to dating apps (around US$50/month) for the opportunity to find emotional satisfaction and relationships. Weverse provides similar value, allowing fans to consume products and content for emotional fulfillment.

Figure 1. 2021F P/E comparison: HYBE appeals to millennials and Gen Z

(x)

80 Global platforms appealing to millennials and Gen Z are 1,703 634 suitable comps given HYBE's status as the industry’s leading fan platform operator 60

40

20

0 Facebook Twitter Snap Netflix Match Bumble HYBE YG Ent. JYP Ent.SM Ent. WMG Group Social networking/content/platform Fan platform Entertainment/content

Source: Bloomberg, Mirae Asset Securities Research

Mirae Asset Securities Research 3 April 6, 2021 HYBE Corporation

Figure 2. HYBE: P/E to approach 60x as platform business gains ground

(x) 60 12MF P/E Earnings and multiple to rise thanks to: 1) industry- leading fan platforms; and 2) expansion of the fandom economy 50

40

30

20 10/20 11/20 12/20 1/21 2/21 3/21

Source: WISEfn, Mirae Asset Securities Research

Figure 3. 12MF P/Es of YG, JYP and SM to break above historical highs as global fan platforms facilitate increased monetization

(x) Global fan platforms likely to increase 60 YG Ent. monetization, leading to earnings JYP Ent. and multiple expansion 50 SM Ent.

40

30

20

10

0 3/14 3/15 3/16 3/17 3/18 3/19 3/20 3/21

Source: WISEfn, Mirae Asset Securities Research

Figure 4. HYBE’s P/E premium: Multiple to rise in tandem with Figure 5. HYBE’s P/E premium: Multiple to rise in tandem with avg. multiple of three major entertainment firms avg. multiple of three major entertainment firms

(%) (%) 40 Premium vs. big 3 domestic entertainment firms 80 Premium vs. big 3 domestic entertainment firms

60 20

40 0 20

-20 0

-40 -20 10/20 11/20 12/20 1/21 2/21 3/21 10/20 11/20 12/20 1/21 2/21 3/21

Source: WISEfn, Mirae Asset Securities Research Source: WISEfn, Mirae Asset Securities Research

Mirae Asset Securities Research 4 April 6, 2021 HYBE Corporation

Table 3. HYBE and peer group performance (%, Wbn) Market Share price Revenue OP OP margin NP EPS growth cap YTD -1M -3M 20 21F 22F 20 21F 22F 20 21F 22F 20 21F 22F 20 21F 22F HYBE 51.9 14.1 53.8 8,657 796 1,212 1,649 146 244 338 18.3 20.2 20.5 86 173 231 1.2 103.5 34.0 Entertainment/content producers WMG -10.5 -4.2 -7.7 19,754 5,328 5,626 6,283 -273 644 878 -5.1 11.5 14.0 -567 364 556 - 194.2 58.0 SM Entertainment -0.2 -7.8 0.5 697 580 648 737 6 41 62 1.1 6.4 8.4 -70 22 33 -667.8 130.9 54.7 YG Entertainment 1.3 -7.8 2.8 835 255 342 400 6 35 46 2.3 10.1 11.5 9 29 33 - 156.7 4.3 JYP Ent ertainment -9.1 -5.5 -7.1 1,239 144 179 216 44 57 70 30.6 31.9 32.3 30 43 52 -5.8 40.0 19.2 Content platforms Netflix -0.2 5.5 3.2 269,704 29,479 33,840 39,269 5,408 6,886 8,890 18.3 20.3 22.6 3,257 5,071 6,707 46.9 33.3 26.0 Walt Disney 4.3 0.5 6.4 387,250 78,043 77,729 97,030 4,528 8,601 15,949 5.8 11.1 16.4 -3,418 3,763 9,455 - -8.5 156.5 iQIYI -4.8 -35.1 -7.8 14,827 5,076 5,600 6,350 -1,032 -692 -210 -20.3 -12.4 -3.3 -1,203 -915 -384 32.7 41.0 62.6 Spotify -13.2 -4.2 -12.2 58,823 10,599 12,459 14,885 -394 -281 -10 -3.7 -2.3 -0.1 -781 -468 -176 -201.0 46.6 56.6 Tencent Music 4.5 -22.4 3.8 38,425 4,981 6,070 7,318 698 859 1,190 14.0 14.2 16.3 710 776 1,068 105.7 12.4 35.0 Social networking Facebook 9.3 15.9 11.1 960,121 101,382 121,656 145,104 38,530 44,395 53,567 38.0 36.5 36.9 34,373 36,828 44,322 57.7 21.0 16.9 Twitter 17.9 -4.4 17.1 57,514 4,383 5,403 6,566 31 1,058 1,329 0.7 19.6 20.2 -1,339 237 434 - 205.1 32.7 Snap 8.8 -5.6 9.9 92,782 2,956 4,299 6,249 -1,017 61 909 -34.4 1.4 14.5 -1,114 -872 -162 13.3 153.3 - Specialized social networking Match Group -5.6 -0.7 -4.8 43,318 2,820 3,196 3,759 879 1,045 1,327 31.2 32.7 35.3 152 697 899 -56.8 11.9 29.4 Bumble - 3.1 - 12,813 687 817 1,010 -125 34 133 -18.2 4.2 13.2 -172 -25 61 - 759.5 320.6 Avg. 3.9 -3.9 4.9 5.2 13.7 17.3 -67.4 126.7 64.8 Source : Bloomberg , Mirae Asset Securities Research

Table 4. HYBE and peer group valuations (%, x) ROE P/E P/B P/S EV/EBITDA EV/EBIT 20 21F 22F 20 21F 22F 20 21F 22F 20 21F 22F 20 21F 22F 20 21F 22F HYBE 12.5 36.3 32.5 81.4 49.6 37.0 7.2 11.3 8.7 8.8 7.1 5.3 27.1 30.6 22.6 33.6 31.6 25.3 Entertainment/content producers WMG - -956.1 285.1 - 54.1 34.2 1,084.4 50.9 15.4 3.8 3.5 3.2 194.4 22.4 18.6 - 35.6 26.9 SM Entertainment -16.0 5.4 7.9 - 32.1 20.8 1.6 1.7 1.6 1.2 1.1 0.9 6.9 6.2 5.5 83.4 12.2 11.3 YG Entertainment 2.5 8.0 8.6 62.8 34.2 32.8 2.4 2.3 2.1 3.2 2.4 2.1 34.6 14.9 12.4 126.5 21.3 22.6 JYP Entertainment 18.5 21.1 21.1 36.6 28.0 23.5 6.8 5.4 4.6 8.0 6.9 5.7 26.3 18.9 15.7 28.7 18.3 15.8 Content platforms Netflix 29.6 34.0 33.1 67.8 50.9 40.4 21.6 15.7 11.5 9.5 8.0 6.9 53.1 37.0 29.1 54.5 41.0 31.9 Walt Disney -5.7 2.4 6.7 - 102.2 39.8 4.0 3.9 3.6 5.6 5.0 4.0 52.2 39.7 24.2 308.5 56.0 28.8 iQIYI -74.8 -88.0 -16.4 - - - 9.3 12.5 10.0 2.7 2.6 2.3 - - 163.1 - - - Spotify -25.6 -8.9 -3.5 - - - 15.7 15.6 16.1 5.5 4.7 4.0 - - 289.2 - - - Tencent Music 8.7 9.3 11.5 84.9 40.1 29.7 8.4 4.4 3.9 11.7 6.4 5.3 - 39.9 28.8 100.4 41.0 28.6 Social networking Facebook 25.4 22.9 21.5 29.6 24.5 20.9 6.6 5.6 4.4 9.9 7.9 6.6 17.8 14.6 12.1 22.0 21.2 17.1 Twitter -13.6 7.6 10.0 - 69.8 52.6 6.2 6.4 5.8 13.5 10.6 8.7 75.2 31.9 25.1 1,471.5 66.8 49.2 Snap -41.2 -13.3 10.0 - 1,702.8 117.7 35.2 36.3 26.3 31.8 21.6 14.8 - 246.6 75.2 - - 219.5 Specialized social networking Match Group - -94.8 818.8 75.6 63.7 49.2 - - 74.8 13.3 13.6 11.5 53.4 38.9 31.6 57.6 44.0 35.3 429. Bumble -12.5 0.7 3.8 - 633.8 150.7 76.9 4.5 4.4 - 15.7 12.7 - 68.3 53.0 - 148.9 7 Avg. -7.1 -67.6 83.4 62.7 222.0 50.0 91.9 12.6 12.9 9.2 7.8 6.3 54.1 46.9 53.7 228.7 68.2 50.8 Source : Bloomberg , Mirae Asset Securitie s Research

Mirae Asset Securities Research 5 April 6, 2021 HYBE Corporation

II. Investment points

Inevitable emergence of fan platforms

YouTube, the world’s largest content platform, draws over 2bn MAUs, generates roughly W20tr a year in revenue, and has a market value (unofficial) of roughly W200tr. In addition to such overwhelming quantitative indicators, the platform also boasts strong user loyalty; around 60% of US users watch videos on YouTube every day.

While content consumption patterns vary across the different categories of YouTube channels (e.g., music, gaming, entertainment, sports, education, news, etc.), the platform provides content in a uniform format, lacking genre-specific features that could greatly improve the user experience (e.g., different user interfaces or content sourcing methods).

Against this backdrop, we think the emergence of fan platforms focusing on music content, artists, and fans is an inevitable trend.

1) Music is by far the most popular type of content on YouTube, accounting for almost half of the platform’s traffic. Indeed, 44 of the top 100 most-subscribed YouTube channels are music channels. Music channels also represent 41% of views and 44% of subscribers among the top 100 channels. Of the top 30 most-viewed videos, only one features non-music content.

2) Music consumers tend to be much more enthusiastic (higher propensity to spend) and engaged relative to consumers of other types of content, as evidenced by the number of comments (average of 730,000 comments for music channels, vs. 320,000 for gaming, 130,000 for personalities, 70,000 for entertainment, 60,000 for lifestyle, 30,000 for sports, and 3,000 for news).

It is therefore unsurprising to see the emergence of platforms catering to the special needs of music fans. Gaming is another category that has specialized platforms (Twitch, etc.) providing real-time, immersive experiences for users; in the gaming industry, YouTube is often used for supplementary purposes, such as promotions and content libraries.

Figure 6. No. of YouTube subscribers by category; music Figure 7. No. of comments by category (avg.) accounts for nearly 35%

(mn) ('000) Absence of dedicated fandom platforms 120 800

100 Gaming has specialized platforms (Twitch, etc.) 600

80 400 60

40 200

20 0

0 Music Sports Games News Live VR streaming

Source: YouTube, Mirae Asset Securities Research Source: YouTube, Mirae Asset Securities Research

Mirae Asset Securities Research 6 April 6, 2021 HYBE Corporation

Figure 8. Breakdown of top 100 Figure 9. Breakdown of top 100 Figure 10. Breakdown of top 100 channels by category channels by views channels by subscribers

Music Entertainment Education Music Entertainment Education Music Entertainment Education Sports Film Games Sports Film Games Sports Film Games Personalities Comedy News Personalities Comedy News How-to Personalities Comedy News How-to How-to 2% 1% 2% 1% 2% 1% 2% 2% 3% 2% 1% 1% 3% 4% 5% 2% 2% 5% 4% 1% 5% 41% 44% 8% 44% 11% 9%

30% 33% 29%

Source: YouTube, Mirae Asset Securities Research Source: YouTube, Mirae Asset Securities Research Source: YouTube, Mirae Asset Securities Research

Table 5. Top 30 most-viewed YouTube videos: 29 music videos and one non- (children’s cartoon) Rank Video Uploader Views (bn) Upload date 1 " Dance" Pinkfong Kids' Songs & Stories 8.26 6/17/16 2 "" Luis Fonsi 7.28 1/12/17 3 "Shape of You" Ed Sheeran 5.25 1/30/17 4 "Johny Yes Papa" LooLoo Kids 5.07 10/8/16 5 "See You Again" Wiz Khalifa 5.04 4/6/15 6 "Masha and the Bear - Recipe for Disaster" Get Movies 4.43 1/31/12 7 "" 4.13 11/19/14 8 "Gangnam Style" Psy 4.03 7/15/12 9 "Learning Colors - Colorful Eggs on a Farm" Miroshka TV 3.85 2/27/18 10 "Bath Song" Cocomelon - Nursery Rhymes 3.84 5/2/18 11 "Phonics Song with Two Words" ChuChu TV 3.67 3/6/14 12 "Sugar" Maroon 5 3.43 1/14/15 13 "Sorry" 3.42 10/22/15 14 "Roar" 3.31 9/5/13 15 "Counting Stars" OneRepublic 3.24 5/31/13 16 "Thinking Out Loud" Ed Sheeran 3.22 10/7/14 17 "Dame Tu Cosita" El Chombo 3.22 4/5/18 18 "Shake It Off" Taylor Swift 3.04 8/18/14 19 "Faded" Alan Walker 3.03 12/3/15 20 "Dark Horse" Katy Perry 3.02 2/20/14 21 "Lean On" Official 3.01 3/22/15 22 "Bailando" Enrique Iglesias 3 4/11/14 23 "Girls Like You" Maroon 5 2.99 5/31/18 24 "Let Her Go" Passenger 2.95 7/25/12 25 "Mi Gente" 2.89 6/29/17 26 "Hello" Adele 2.81 10/22/15 27 "Perfect" Ed Sheeran 2.79 11/9/17 28 "Waka (This Time for Africa)" 2.78 6/4/10 29 "Wheels on the Bus" Cocomelon - Nursery Rhymes 2.75 5/24/18 30 "Blank Space" Taylor Swift 2.75 11/10/14 Source : YouTube , Mirae Asset Securities Research

Mirae Asset Securities Research 7 April 6, 2021 HYBE Corporation

Securing an early lead in direct-to-fan platforms

HYBE’s platforms widening lead over rivals

When a new platform manages to secure mega-hit content, this can set off a virtuous cycle of new user inflows and strengthened platform leadership. While the industry-wide move toward direct-to-artist/direct-to-fan models has just begun, we note that HYBE’s direct-to-fan platforms (Weverse, VenewLive) have already widened their lead over rivals.

1) HYBE has gained improved access to live fan bases and secured streaming technology (VenewLive) though the acquisition of NAVER’s V Live business (January), the launch of a joint venture with Kiswe, and equity investments in partners (YG Entertainment and UMG).

2) HYBE has also secured top global artists. In the near term, the strategic partnerships with UMG and YG Entertainment and acquisition of Ithaca Holdings should give Weverse access to a large number of top-tier artists, making it well-positioned to outperform rivals in all measurable fandom metrics (YouTube subscriber count, follower count, Spotify monthly listeners, etc.).

Given their clear lead in terms of technology and content, we believe HYBE’s platforms are highly likely to solidify their brand power and become a core part of the industry ecosystem (perhaps being viewed as a gateway for new artists going forward). As their brand power strengthens, the platforms should see uncertainties inherent to the industry diminish, while opportunities to tap into other hit content/artists should appear.

Figure 11. HYBE: Corporate structure changes (Apr. 2021 vs. end-2020)

Source: Company data, Mirae Asset Securities Research

Mirae Asset Securities Research 8 April 6, 2021 HYBE Corporation

Table 6. Artists managed by Ithaca Holdings (100% acquired by HYBE) (mn) Artist Instagram followers YouTube subscribers YouTube views Monthly Spotify listeners Justin Bieber 160.0 62.0 24,292 69 220.0 47.6 18,753 56 0.9 10.0 7,750 38 Dan + Shay 1.1 1.5 1,021 15 Demi Lovato 100.0 17.0 5,811 31 J Balvin 46.6 30.4 17,662 54 Tori Kelly 3.5 2.9 574 5 2.0 3.8 2,097 11 The Knocks 0.0 0.1 49 7 Lil Dicky 3.1 7.5 2 5 Quavo 19.1 0.2 18 8 4.8 6.8 4,335 35 Source : Instagram , YouTube , Spotify , Mirae Asset Securities Research

Table 7. UMG (strategic partnership) artists (mn) Artist Instagram followers YouTube subscribers YouTube views Monthly Spotify listeners Drake 77.7 24.2 9,634 57 Justin Bieber 160.0 62.0 24,292 69 Ariana Grande 220.0 47.6 18,753 56 31.9 47.0 19,283 40 29.9 23.6 13,902 70 22.9 21.4 9,778 44 Imagine 5.0 24.8 11,065 39 Dragons Maroon 5 7.9 33.6 17,812 50 Sam Smith 15.7 14.1 7,547 34 Taylor Swift 150.0 42.0 21,741 44 Kendrick Lamar 9.3 9.4 3,573 27 59.5 27.8 9,999 41 Weverse participants Gracie Abrams 0.4 0.3 33 4 New Hope Club 0.6 1.9 165 1 Alexander 23 0.2 0.1 20 8 Yungblud (pending) 3.5 2.3 526 12 Source : Instagram , YouTube , Spotify , Mirae Asset Securities Research

Table 8. Artists signed to (potential investment in HYBE) (mn) Artist Instagram followers YouTube subscribers YouTube views Monthly Spotify listeners Ed Sheeran 31.80 47.20 23,099,086,525 52,755,565 22.84 30.20 13,926,833,986 52,462,342 David Guetta 8.75 23.00 14,157,433,003 46,434,164 Coldplay 12.33 18.50 12,069,110,895 36,907,467 Sia 6.16 19.40 10,362,606,053 43,282,471 Charlie Puth 15.31 17.80 7,236,349,525 22,879,473 63.78 17.40 7,092,994,339 61,644,061 86.88 16.80 5,841,187,271 41,892,462 Green Day 3.12 5.10 2,968,045,798 18,672,424 Muse 1.80 3.14 2,157,904,830 9,660,671 Tones and I 0.68 4.70 1,980,311,029 22,779,643 Anne Marie 7.30 9.27 1,972,810,949 22,309,854 Source : Instagram , YouTube , Spotify , Mirae Asset Securities Research

Mirae Asset Securities Research 9 April 6, 2021 HYBE Corporation

Fandom economy: Ample room to grow

In 2020, the pandemic weighed on direct revenue streams in the entertainment industry (i.e., albums, concerts, ads, and TV appearances). Of note, overseas labels/management firms, especially those with a high share of direct revenue from concerts and TV appearances, displayed far more sluggish earnings than domestic entertainment firms, which were able to defend earnings through album sales growth.

While the contactless environment led to soft 2020 revenue growth at overseas labels like UMG (+4%) and Warner Music Group (WMG; -1%), HYBE saw robust growth (+36% YoY) fueled by a 58.9% increase in indirect revenue (online concerts, merchandising/licensing, fan clubs, etc.). The company’s efforts to keep its artist fandom intact via community features and content led to a 7.8%p rise in the share of indirect revenue (53.4%), making its business structure less vulnerable to the external environment.

Given the new normal of contactless interactions, we expect the global entertainment industry to shift its focus to indirect revenue sources based on fandom monetization. For HYBE, we note that such monetization potential is not confined to the domestic and Japanese markets. Indeed, amid rapid growth in indirect revenue, HYBE derived only 27% of its revenue from the domestic market in 2020.

Easily accessible global merchandising market

Once Weverse Shop gains access to overseas artists, the platform is likely to strive to increase its share of the fragmented merchandising/licensing market. Currently, artist merchandise is sold via 1) sales agents and 2) labels’ official websites. Given their sole focus on sales (no incentives for increasing fan engagement/time spent), we believe such channels are ineffective at attracting new fans or maximizing consumption. As such, Weverse/Weverse Shop could gain the upper hand in the merchandising/licensing market.

1) Merchandise sales agents can be classified according to whether or not they partner with platforms (such as and Spotify). In March, Amazon Music launched the Artist Merch Shop to offer licensed merchandise, with sellers and outsourced firms taking charge of design and manufacturing, respectively. Spotify, which partners with Merchbar (agent), sells merchandise on its artist pages. Meanwhile, Merchtraffic, which sells the merchandise of U2, Coldplay, Dua Lipa, and Post Malone, is an example of a distribution agent without a platform partnership.

2) Large labels, including UMG, WMG, and Entertainment (SME), also sell merchandise on their official websites (UMG: Justin Bieber, Ariana Grande, and The Weeknd; WMG: Ed Sheeran and ; SME: Mariah Carey and ) or YouTube channels (SME: Ozuna).

Figure 12. BTS merchandise on Weverse Shop

Source: Weverse Shop, Mirae Asset Securities Research

Mirae Asset Securities Research 10 April 6, 2021 HYBE Corporation

Figure 13. Merchandise for sale on UMG’s official website

Source: UMG, Mirae Asset Securities Research

Figure 14. Amazon Music’s Artist Merch Shop

Source: Amazon Music, Mirae Asset Securities Research

Figure 15. Merchbar sells merchandise on artists’ Spotify pages

Source: Spotify, Merchbar, Mirae Asset Securities Research

Mirae Asset Securities Research 11 April 6, 2021 HYBE Corporation

Expandability of fandom economy-based income models

As fandom economies materialize with the help of social media, we could see completely new income models emerge. Under new economic structures in which fandoms play driving roles, we believe consumers will go beyond purchasing goods and services and instead proactively communicate what they want/make value propositions.

US video request start-up Cameo is a good case in point. The service allows fans to request personalized videos from celebrities for a price. The platform’s business model is based on commissions: celebrities set the price of the requests, and the platform takes 25% of each order.

Cameo has seen explosive growth since the beginning of the pandemic, generating US$100mn in revenue from roughly 1mn videos. The platform counts SoftBank, Amazon’s Alexa Fund, Lightspeed, and Spark Capital as major investors and received a valuation of US$1bn in its most recent funding round (Mar. 31, 2021).

Cameo’s fan base monetization model is similar to that of the domestic fan platform Lysn operated by Dear U, a subsidiary of SM Entertainment. The platform’s Dear U Bubble is a one- on-one messaging service that allows fans to chat with artists for a monthly subscription fee of W4,500. Some artists belonging to SM Entertainment, FNC Entertainment, JYP Entertainment, and Jellyfish Entertainment are available on the service. Meanwhile, Dear U Letter allows fans to receive handwritten letters and photo cards from artists for a price of W8,900 per letter or a monthly subscription of W7,900. TVXQ’s and ’s Wendy are among the artists accessible through the service.

Naturally, the participation of large numbers of artists and loyal fans is important to the success of such fandom economies. For this reason, attracting top-level talent is critical. We believe HYBE’s platforms have already successfully completed this task and are well- positioned to expand fandom economy-based income models.

Figure 16. Cameo: A user pays to request a personalized video, which a celebrity then creates and sends

Source: Cameo, Mirae Asset Securities Research

Mirae Asset Securities Research 12 April 6, 2021 HYBE Corporation

Potential for additional inorganic growth, following example of Nexon, Netflix, and Walt Disney

HYBE’s acquisition of Ithaca Holdings was the largest M&A deal in the history of Korea’s entertainment industry. While the deal is meaningful in that it provides access to a number of high-profile global artists, HYBE’s decision to utilize sizable equity issues on top of its cash holdings suggests there is potential for further M&A activity.

At end-2020, HYBE held cash assets (including current financial assets) of W1.1tr, which would have been sufficient to fund Ithaca Holdings’ W1.07tr price tag. Nevertheless, the company decided to raise capital through a rights offering (W440bn) and a private placement (W181.8bn to Ithaca Holdings’ executives, including Scooter Braun, and artists, including Justin Bieber). As a result, HYBE will still have more than W500bn at its disposal even after the acquisition, which could be used for additional M&As to expand its IP.

Should our expectation prove correct, the company would be following in the footsteps of other major entertainment companies that grew rapidly on the back of hit IP. Content platform providers like Nexon, Netflix, and Walt Disney, which initially relied on individual hits to solidify their user bases, later aggressively scaled up to make their ability to create hits a structural advantage.

We believe a rapid, early scaling up for the purpose of establishing a platform ecosystem would be in the interests of HYBE’s shareholders. As information on additional M&As is limited, it may be premature to make assumptions. That said, fandom-based spending is clearly growing, and a number of new long-term growth drivers in the content industry— including metaverse and AR/VR-based content—are being discussed. At a time when the importance of IP is increasing, we are encouraged by HYBE’s move to secure content to strengthen its platform dominance, even after considering the share dilution effects.

Figure 17. Walt Disney’s market cap and major M&As: Corporate value appreciated as the company delivered hits after securing content

Source: Walt Disney, Mirae Asset Securities Research

Mirae Asset Securities Research 13 April 6, 2021 HYBE Corporation

Figure 18. Nexon: Market cap and major events

(JPYbn) 12/15 5/18 3/20 Publishing Release of FIFA W1tr invested in 3,500 agreement signed Onlilne 4 Hasbro, Bandai Namco, Konami, 12/11 with Tencent for 9/17 10/14 Acquired Korbit and Sega Sammy 3,000 Listed on MapleStory 2 10/18 Tokyo Stock Acquired cryptocurrency Acquired Exchange additional 0.4% exchange via European 2,500 stake in NCsoft subsidiary NXC cryptocurrency 6/12 6/16 7/15 exchange Acquired 12/13 Founder 2,000 Release of Bitstamp 14.7% stake Nexon Arena embroiled in MapleStory 2 in NCsoft (dedicated e- scandal 1,500 sports stadium) opened 1,000 7/20 1/19 500 Release of The Founder pursues Kingdom of the sale of Nexon Winds: Yeon -

Source: Nexon, Mirae Asset Securities Research

Figure 19. Netflix: Market cap and major events

(U$bn) Launched in 300 Korea Launched in Japan, Australia, 250 and New Zealand Expansion into other 200 European countries Service launched in major European countries 150 Expansion into Latin America 100 Streaming service launched in US Expansion into Canada 50

0 5/02 5/03 5/04 5/05 5/06 5/07 5/08 5/09 5/10 5/11 5/12 5/13 5/14 5/15 5/16 5/17 5/18 5/19 5/20

Source: Mirae Asset Securities Research

Mirae Asset Securities Research 14 April 6, 2021 HYBE Corporation

III. Earnings outlook

Operating profit forecasts: W232.5bn in 2021 and W384.5bn in 2022

For 2021, we forecast revenue of W1.1tr (+40.0% YoY; all growth figures hereafter are YoY), operating profit of W232.5bn (+63.2%), and net profit attributable to owners of the parent of W160.4bn (+89.4%). For 2022, we forecast revenue of W1.7tr (+56.8%), operating profit of W384.5bn (+65.4%), and net profit attributable to owners of the parent of W276.8bn (+72.5%).

Despite the impact of the pandemic, HYBE recorded robust earnings in 2020, driven by strong indirect revenue (+58.9% YoY; 53.4% of overall revenue). In 2021, we expect strong growth in both direct revenue (+40.3%) and indirect revenue (+39.7%), supported by the resumption of live performances and album releases in 2H21 and the addition of third-party artists on the Weverse platform. Based on our assumption that artist activities (live performances, etc.) will resume in 2H21, we expect the share of indirect revenue to remain largely unchanged YoY through 2021 before becoming more equal to the share of direct revenue in 2022.

Because HYBE’s income structure differs from those of existing entertainment firms, we do not yet have strong visibility on earnings. It should be noted our earnings estimates are highly likely to be revised depending on artist schedules, the addition of new artists to Weverse, and the platform’s user inflows.

Table 9. HYBE: Quarterly and annual earnings (Wbn, %, mn copies) 1Q20 2Q20 3Q20 4Q20 1Q21F 2Q21F 3Q21F 4Q21F 2019 2020 2021F 2022F Revenue 139 156 190 312 140 172 308 494 587 796 1,115 1,701 Direct 89 66 64 155 71 88 162 199 319 371 520 844 % of revenue 64.2 42.3 33.7 49.5 50.7 51.3 52.6 40.2 54.4 46.6 46.7 49.4 Albums 81 52 47 141 56 73 146 132 108 321 408 489 Live performances 0 1 3 0 0 0 0 50 191 3 50 300 Ads/appearance fees 8 12 14 14 14 15 16 17 20 47 62 75 Indirect 50 90 126 158 69 84 146 296 268 425 595 857 % of revenue 35.8 57.7 66.3 50.5 49.3 48.7 47.4 59.8 45.6 53.4 53.3 50.6 Merchandise & licensing 34 56 100 67 27 35 73 154 170 259 290 434 Content 8 27 16 81 32 39 62 130 78 133 264 369 Other (fan club, etc.) 8 7 10 10 10 10 11 11 20 33 41 53 Ithaca, etc. 0 0 0 0 0 0 55 60 0 0 115 290 OP 21 29 40 53 14 26 74 119 99 142 232 374 OP margin 14.9 18.7 21.1 16.8 10.0 15.0 24.0 24.0 16.8 17.9 20.9 22.0 NP 15 17 25 28 9 17 50 83 74 85 159 269 Net margin 10.8 10.8 13.3 8.8 6.5 9.8 16.1 16.8 12.6 10.6 14.2 15.8 YoY Revenue N/A N/A N/A N/A 0.8 10.5 62.4 58.3 94.9 35.6 40.0 52.6 Direct N/A N/A N/A N/A -20.4 34.1 153.9 28.4 54.0 16.1 40.3 62.2 Indirect N/A N/A N/A N/A 38.7 -6.8 15.9 87.6 185.1 58.9 39.7 44.2 OP N/A N/A N/A N/A -32.6 -11.2 84.6 126.0 23.5 44.3 63.2 61.0 NP N/A N/A N/A N/A -39.5 -0.6 96.1 202.0 TTB 14.8 87.1 70.0 Key assumptions Album sales 4.5 0.8 0.6 4.4 0.6 0.8 4.0 3.5 6.6 10.3 8.9 11.6 Source : Company data, Mirae Asset Securities Research estimates

Mirae Asset Securities Research 15 April 6, 2021 HYBE Corporation

Figure 20. HYBE: Revenue and OP margin

(Wtr) (%) Revenue (L) OP margin (R) 2.0 25

1.5 20

1.0

15 0.5

0.0 10 2019 2020 2021F 2022F

Source: Mirae Asset Securities Research

Figure 22. HYBE: Direct revenue share vs. indirect revenue Figure 21. HYBE: Album sales assumptions share

(mn) (%) Direct revenue Indirect revenue 15 80

70 12

60 9

50 6 40

3 30

0 20 2018 2019 2020 2021F 2022F 2018 2019 2020 2021F 2022F

Source: Mirae Asset Securities Research Source: Mirae Asset Securities Research

Figure 23. HYBE: Revenue breakdown by region (2020, %) Figure 24. HYBE: Revenue breakdown by source (2020, %)

Other, 4.1

Content, 16.8 Online, 30.5 Domestic, 27.0 Albums, 40.3

Merchandise/ Other, 1.0 licensing, 32.5 North America, Asia, 24.1 17.3

Concerts, 0.4 Ads/fees, 5.9

Source: Company data, Mirae Asset Securities Research Source: Company data, Mirae Asset Securities Research

Mirae Asset Securities Research 16 April 6, 2021 HYBE Corporation

HYBE Corporation (352820 KS)

Income statement (summarized) Balance sheet (summarized) (Wbn) 2019 2020 2021F 2022F (Wbn) 2019 2020 2021F 2022F Revenue 587 796 1,115 1,748 Current assets 295 1,389 1,523 1,994 Cost of revenue 386 422 618 954 Cash & equivalents 161 380 514 449 GP 201 374 497 794 AR & other receivables 96 115 115 181 SG&A expenses 103 229 265 409 Inventory 13 62 62 97 OP (adj.) 99 146 232 384 Other current assets 25 832 832 1,267 OP 99 146 232 384 Non-current assets 68 535 571 617 Non-operating profit -1 -20 -8 -4 Investments in associates 2 1 1 2 Net financial income -1 -2 0 0 PP&E 8 48 48 48 Net income from associates -1 -2 0 0 Intangible assets 26 288 324 356 Pretax profit 98 126 224 380 Total assets 363 1,924 2,095 2,611 Income tax 26 39 54 91 Current liabilities 175 296 296 463 Profit from continuing operations 72 87 170 289 AP & other payables 29 38 38 59 Profit from discontinued operations 0 0 0 0 Short-term financial liabilities 11 21 21 31 NP 72 87 170 289 Other current liabilities 135 237 237 373 Attributable to owners 74 86 160 277 Non-current liabilities 15 429 429 490 Attributable to minority interests -1 1 10 12 Long-term financial liabilities 3 323 323 323 Total comprehensive income 72 87 170 289 Other non-current liabilities 12 106 106 167 Attributable to owners 74 85 170 289 Total liabilities 189 726 726 953 Attributable to minority interests -1 1 0 0 Equity attributable to owners 175 1,195 1,356 1,632 EBITDA 108 180 232 384 Capital stock 1 18 18 18 FCF 87 77 170 378 Capital surplus 213 1,132 1,132 1,132 EBITDA margin (%) 18.4 22.6 20.8 22.0 Retained earnings -42 44 204 481 OP margin (%) 16.9 18.3 20.8 22.0 Minority interests -1 4 13 26 Net margin (%) 12.6 10.8 14.3 15.8 Shareholders' equity 174 1,199 1,369 1,658

Cash flow statement (summarized) Key valuation metrics/ratios (Wbn) 2019 2020 2021F 2022F 2019 2020 2021F 2022F Operating cash flow 92 117 170 378 P/E (x) - 56.3 55.8 32.7 NP 72 87 170 289 P/CF (x) - 32.5 40.0 23.8 Non-cash income/expenses 19 61 54 91 P/B (x) - 4.8 6.7 5.5 Depreciation 8 21 0 0 EV/EBITDA (x) - 27.4 34.0 19.7 Amortization 1 14 0 0 EPS (W) 2,601 2,843 4,446 7,587 Other 10 26 54 91 CFPS (W) 3,211 4,920 6,206 10,421 Chg. in working capital 5 -26 0 89 BPS (W) 6,113 33,554 37,158 44,745 Chg. in AR & other receivables -44 -20 0 -64 DPS (W) 0 0 0 0 Chg. in inventory -8 -54 0 -35 Dividend payout ratio (%) 0.0 0.0 0.0 0.0 Chg. in AP & other payables 11 9 0 20 Dividend yield (%) - 0.0 0.0 0.0 Income tax -30 -42 -54 -91 Revenue growth (%) 95.0 35.6 40.1 56.8 Cash flow from investing activities 12 -1,022 -36 -453 EBITDA growth (%) 28.6 66.7 28.9 65.5 Chg. in PP&E -5 -39 0 0 OP growth (%) 23.8 47.5 58.9 65.5 Chg. in intangible assets -2 -13 -36 -32 EPS growth (%) - 9.3 56.4 70.6 Chg. in financial assets -1 -726 0 -421 AR turnover (x) 8.2 7.7 9.9 12.1 Other 20 -244 0 0 Inventory turnover (x) 62.9 21.3 18.0 22.0 Cash flow from financing activities -1 1,133 0 10 AP turnover (x) 19.8 14.1 17.9 21.5 Chg. in financial liabilities -7 329 0 10 ROA (%) 25.5 7.6 8.5 12.3 Chg. in equity 14 936 0 0 ROE (%) 56.5 12.5 12.6 18.5 Dividends 0 0 0 0 ROIC (%) 979.0 44.6 38.7 63.9 Other -8 -132 0 0 Debt-to-equity ratio (%) 109.2 60.5 53.0 57.5 Chg. in cash 103 219 514 -65 Current ratio (%) 168.8 469.0 514.3 430.6 Beginning balance 58 161 0 514 Net debt-to-equity ratio (%) -86.7 -63.0 -69.7 -77.6 Ending balance 161 380 514 449 Interest coverage ratio (x) 78.3 37.4 0.0 0.0 Source: Company data, Mirae Asset Securities Research estimates

Mirae Asset Securities Research 17 April 6, 2021 HYBE Corporation

Appendix 1

Important disclosures and disclaimers Two-year rating and TP history

Company Date Rating TP (W) (W) HYBE HYBE Corporation (352820) 04/05/21 Buy 340,000 400,000

300,000

200,000

100,000

0 Apr 19 Apr 20 Apr 21

Stock ratings Sector ratings Buy Expected 12-month performance: +20% or greater Overweight Expected to outperform the market over 12 months Trading Buy Expected 12-month performance: +10% to +20% Neutral Expected to perform in line with the market over 12 months Hold Expected 12-month performance: -10% to +10% Underweight Expected to underperform the market over 12 months Sell Expected 12-month performance: -10% or worse

Rating and TP history: Share price (─), TP (▬), Not Rated ( ■), Buy (▲), Trading Buy (■), Hold (●), Sell (◆) * Our investment rating is a guide to the expected return of the stock over the next 12 months. * Outside of the official ratings of Mirae Asset Securities Co., Ltd., analysts may call trading opportunities should technical or short-term material developments arise. * The TP was determined by the research analyst through valuation methods discussed in this report, in part based on estimates of future earnings. * TP achievement may be impeded by risks related to the subject securities and companies, as well as general market and economic conditions.

Ratings distribution and investment banking services Buy Trading Buy Hold Sell Ratings distribution 79.00% 13.00% 7.00% 1.00% Investment banking services 63.16% 31.58% 5.26% 0.00% * Based on recommendations in the last 12-months (as of March 31, 2021)

Disclosures As of the publication date, Mirae Asset Securities Co., Ltd. has acted as a liquidity provider for equity-linked warrants backed by shares of HYBE Corporation as an underlying asset; other than this, Mirae Asset Securities has no other special interests in the covered companies.

Analyst certification The research analysts who prepared this report (the “Analysts”) are registered with the Korea Financial Investment Association and are subject to Korean securities regulations. They are neither registered as research analysts in any other jurisdiction nor subject to the laws or regulations thereof. Each Analyst responsible for the preparation of this report certifies that (i) all views expressed in this report accurately reflect the personal views of the Analyst about any and all of the issuers and securities named in this report and (ii) no part of the compensation of the Analyst was, is, or will be directly or indirectly related to the specific recommendations or views contained in this report. Mirae Asset Securities Co., Ltd. (“Mirae Asset Securities”) policy prohibits its Analysts and members of their households from owning securities of any company in the Analyst’s area of coverage, and the Analysts do not serve as an officer, director, or advisory board member of the subject companies. Except as otherwise specified herein, the Analysts have not received any compensation or any other benefits from the subject companies in the past 12 months and have not been promised the same in connection with this report. Like all employees of Mirae Asset Securities, the Analysts receive compensation that is determined by overall firm profitability, which includes revenues from, among other business units, the institutional equities, investment banking, proprietary trading, and private client divisions. At the time of publication of this report, the Analysts do not know or have reason to know of any actual, material conflict of interest of the Analyst or Mirae Asset Securities except as otherwise stated herein.

Disclaimers This report was prepared by Mirae Asset Securities, a broker-dealer registered in the Republic of Korea and a member of the Korea Exchange. Information and opinions contained herein have been compiled in good faith and from sources believed to be reliable, but such information has not been independently verified and Mirae Asset Securities makes no guarantee, representation or warranty, express or implied, as to the fairness, accuracy, completeness, or correctness of the information and opinions contained herein or of any translation into English from the . In case of an English translation of a report prepared in the Korean language, the original Korean language report may have been made available to investors in advance of this report. The intended recipients of this report are sophisticated institutional investors who have substantial knowledge of the local business environment, its common practices, laws, and accounting principles, and no person whose receipt or use of this report would violate any laws or regulations or subject Mirae Asset Securities or any of its affiliates to registration or licensing requirements in any jurisdiction shall receive or make any use hereof. This report is for general information purposes only and is not and shall not be construed as an offer or a solicitation of an offer to effect transactions in any securities or other financial instruments. The report does not constitute investment advice to any person, and such person shall not be treated as a client of Mirae Asset Securities by virtue of receiving this report. This report does not take into account the particular investment objectives, financial situations, or needs of individual clients. The report is not to be relied upon in substitution for the exercise of independent judgment. Information and opinions contained herein are as of the date hereof and are subject to change without notice. The price and value of the investments referred to in this report and the income from them may depreciate or appreciate, and investors may incur losses on investments. Past performance is not a guide to future performance. Future returns are not guaranteed, and a loss of original capital may occur. Mirae Asset Securities, its affiliates, and their directors, officers, employees, and agents

Mirae Asset Securities Research 18 April 6, 2021 HYBE Corporation

do not accept any liability for any loss arising out of the use hereof. Mirae Asset Securities may have issued other reports that are inconsistent with, and reach different conclusions from, the opinions presented in this report. The reports may reflect different assumptions, views, and analytical methods of the analysts who prepared them. Mirae Asset Securities may make investment decisions that are inconsistent with the opinions and views expressed in this research report. Mirae Asset Securities, its affiliates, and their directors, officers, employees, and agents may have long or short positions in any of the subject securities at any time and may make a purchase or sale, or offer to make a purchase or sale, of any such securities or other financial instruments from time to time in the open market or otherwise, in each case either as principals or agents. Mirae Asset Securities and its affiliates may have had, or may be expecting to enter into, business relationships with the subject companies to provide investment banking, market-making, or other financial services as are permitted under applicable laws and regulations. No part of this document may be copied or reproduced in any manner or form or redistributed or published, in whole or in part, without the prior written consent of Mirae Asset Securities. For further information regarding company-specific information as it pertains to the representations and disclosures in this Appendix 1, please contact [email protected] or +1 (212) 407-1000.

Distribution United Kingdom: This report is being distributed by Mirae Asset Securities (UK) Ltd. in the United Kingdom only to (i) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”), and (ii) high net worth companies and other persons to whom it may lawfully be communicated, falling within Article 49(2)(A) to (E) of the Order (all such persons together being referred to as “Relevant Persons”). This report is directed only at Relevant Persons. Any person who is not a Relevant Person should not act or rely on this report or any of its contents. United States: Mirae Asset Securities is not a registered broker-dealer in the United States and, therefore, is not subject to U.S. rules regarding the preparation of research reports and the independence of research analysts. This report is distributed in the U.S. by Mirae Asset Securities (USA) Inc., a member of FINRA/SIPC, to “major U.S. institutional investors” in reliance on the exemption from registration provided by Rule 15a-6(b)(4) under the U.S. Securities Exchange Act of 1934, as amended. All U.S. persons that receive this document by their acceptance hereof represent and warrant that they are a major U.S. institutional investor and have not received this report under any express or implied understanding that they will direct commission income to Mirae Asset Securities or its affiliates. Any U.S. recipient of this document wishing to effect a transaction in any securities discussed herein should contact and place orders with Mirae Asset Securities (USA) Inc. Mirae Asset Securities (USA) Inc. accepts responsibility for the contents of this report in the U.S., subject to the terms hereof, to the extent that it is delivered to a U.S. person other than a major U.S. institutional investor. Under no circumstances should any recipient of this research report effect any transaction to buy or sell securities or related financial instruments through Mirae Asset Securities. The securities described in this report may not have been registered under the U.S. Securities Act of 1933, as amended, and, in such case, may not be offered or sold in the U.S. or to U.S. persons absent registration or an applicable exemption from the registration requirements. Hong Kong: This report is distributed in Hong Kong by Mirae Asset Securities (HK) Limited, which is regulated by the Hong Kong Securities and Futures Commission. The contents of this report have not been reviewed by any regulatory authority in Hong Kong. This report is for distribution only to professional investors within the meaning of Part I of Schedule 1 to the Securities and Futures Ordinance of Hong Kong (Cap. 571, Laws of Hong Kong) and any rules made thereunder and may not be redistributed in whole or in part in Hong Kong to any person. India: This report is being distributed by Mirae Asset Capital Markets (India) Private Limited (“MACM”) in India to the customers based in India and is personal information only for those authorised recipient(s). MACM is inter alia a Securities and Exchange Board of India (“SEBI”) registered Research Analyst in India and is not registered outside India. MACM and Mirae Asset, Korea are group entities. MACM makes no guarantee, representation or warranty, express or implied, as to the fairness, accuracy, completeness or correctness of the information and opinions contained herein. The user assumes the entire risk of any use made of this information. This report has been provided for assistance only and is not intended to be and must not alone be taken as the basis for an investment decision. Recipient must read the entire Appendix 1 to the report carefully for Important Disclosures & Disclaimers. All other jurisdictions: Customers in all other countries who wish to effect a transaction in any securities referenced in this report should contact Mirae Asset Securities or its affiliates only if distribution to or use by such customer of this report would not violate applicable laws and regulations and not subject Mirae Asset Securities and its affiliates to any registration or licensing requirement within such jurisdiction.

Mirae Asset Securities Research 19 April 6, 2021 HYBE Corporation

Mirae Asset Securities International Network

Mirae Asset Securities Co., Ltd. () Mirae Asset Securities (HK) Ltd. Mirae Asset Securities (UK) Ltd. One-Asia Equity Sales Team Units 8501, 8507-8508, 85/F 41st Floor, Tower 42 Mirae Asset Center 1 Building International Commerce Centre 25 Old Broad Street, 26 Eulji-ro 5-gil, -gu, Seoul 04539 1 Austin Road West London EC2N 1HQ Korea Kowloon United Kingdom Hong Kong Tel: 82-2-3774-2124 Tel: 852-2845-6332 Tel: 44-20-7982-8000

Mirae Asset Securities (USA) Inc. Mirae Asset Wealth Management (USA) Inc. Mirae Asset Wealth Management (Brazil) CCTVM 810 Seventh Avenue, 37th Floor 555 S. Flower Street, Suite 4410, Rua Funchal, 418, 18th Floor, E-Tower Building New York, NY 10019 , California 90071 Vila Olimpia USA USA Sao Paulo - SP 04551-060 Brazil Tel: 1-212-407-1000 Tel: 1-213-262-3807 Tel: 55-11-2789-2100

PT. Mirae Asset Sekuritas Indonesia Mirae Asset Securities (Singapore) Pte. Ltd. Mirae Asset Securities (Vietnam) LLC Equity Tower Building Lt. 50 6 Battery Road, #11-01 7F, Saigon Royal Building Sudirman Central Business District Singapore 049909 91 Pasteur St. Jl. Jend. Sudirman, Kav. 52 -53 Republic of Singapore District 1, Ben Nghe Ward, Ho Chi Minh City Jakarta Selatan 12190 Vietnam Indonesia Tel: 62-21-515-3281 Tel: 65-6671-9845 Tel: 84-8-3911-0633 (ext.110) Mirae Asset Securities Mongolia UTsK LLC Mirae Asset Investment Advisory (Beijing) Co., Ltd Beijing Representative Office #406, Blue Sky Tower, Peace Avenue 17 2401B, 24th Floor, East Tower, Twin Towers 2401A, 24th Floor, East Tower, Twin Towers 1 Khoroo, Sukhbaatar District B12 Jianguomenwai Avenue, Chaoyang District B12 Jianguomenwai Avenue, Chaoyang District Ulaanbaatar 14240 Beijing 100022 Beijing 100022 Mongolia China China

Tel: 976-7011-0806 Tel: 86-10-6567-9699 Tel: 86-10-6567-9699 (ext. 3300) Representative Office Ho Chi Minh Representative Office Mirae Asset Capital Markets (India) Private Limited 38T31, 38F, Shanghai World Financial Center 7F, Saigon Royal Building Unit No. 506, 5th Floor, Windsor Bldg., Off CST Road, 100 Century Avenue, Pudong New Area 91 Pasteur St. Kalina, Santacruz (East), Mumbai – 400098 Shanghai 200120 District 1, Ben Nghe Ward, Ho Chi Minh City India China Vietnam

Tel: 86-21-5013-6392 Tel: 84-8-3910-7715 Tel: 91-22-62661336

Mirae Asset Securities Research 20