[Korea] Entertainment May 6, 2021 HYBE Corporation Buy (352820 KS ) (Maintain) Foreign buying is happening for a reason TP: W340,000 Upside: 42.0% Mirae Asset Securities Co., Ltd. Jeong -yeob Park
[email protected] 1Q21 review : Above our Revenue of W178.3bn (+28.7% YoY), OP of W21.7bn (+9.2% YoY) expectations and in line with While there were no offline performances or album releases (except for TXT in Japan) in the consensus quarter, merchandising/licensing revenue was strong. Direct revenue was W67.5bn (-24.1% YoY), not far off from our estimate (W70.8bn), affected by a lull in artist activities. Indirect revenue surprised at W110.8bn (+123.4% YoY), as merchandising sales remained steady even in the absence of activities. Despite a 12%p QoQ rise in the indirect revenue mix, OP margin declined to 12.2% (-2.2%p YoY, -5.6% QoQ). This was largely due to the absence of activities and one-off expenses related to the company’s office relocation, name change, and M&A, and is thus not a cause for concern. Establishing no. 1 platform Global fan platforms: Pioneering the development of fandom communities and position artist/celebrity merchandising market In 2020, Weverse recorded revenue of W219.1bn (+180% YoY) and operating profit of W15.6bn (turning to profit YoY). MAU in 1Q21 reached 4.9mn. Platform indicators to improve: With the resumption of label activities in 2Q21 and the upcoming inclusion of Ithaca Holdings/YG Entertainment artists, we expect Weverse/Weverse Shop traffic to improve in both quantity and quality (increases in MAU and ARPPU).