[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. Jeong -yeob Park
[email protected] Valuation and recommendation Initiate coverage with Buy and TP of W340,000 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). Our target multiple stems from our view of HYBE as the leading fan platform provider (with direct and indirect access to top global artists). 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. The company has expanded its artist portfolio through partnerships with Universal Music Group (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 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.) 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.