Shares of major K-pop agencies are under pressure, as slowing growth and weakening profitability dampen investor sentiment.
Hybe, the agency behind BTS, closed at 245,500 won ($167) Tuesday, down 1.8 percent from the previous session, according to the Korea Exchange.
The stock rallied earlier this year on expectations of a BTS comeback-driven boost, hitting a 52-week intraday high of 405,500 won on Feb. 13. However, gains have since reversed, with the share price nearly halving from its peak amid concerns over rising costs and margin pressure.
Hybe fell more than 15.5 percent on March 23 — the first trading session following a key performance event — and has continued to decline, bringing its year-to-date loss to 25.61 percent.
The drop comes as Hybe’s earnings profile has weakened. Despite posting record revenue of 2.65 trillion won last year, operating profit plunged 74 percent on-year to 49.9 billion won, highlighting a widening gap between sales and profitability. The trend is expected to persist in the first quarter.
Facing similar headwinds, the broader sector has also declined. Shares of JYP Entertainment have fallen 17.77 percent year-to-date, while SM Entertainment and YG Entertainment have dropped 34.81 percent and 25.65 percent, respectively.
Reflecting the sectorwide weakness, brokerages are increasingly lowering their target prices for the agencies.
Hybe’s target price has been cut from 450,000–500,000 won at the end of last month to around 380,000 won, with Yuanta Securities offering the most conservative outlook at 370,000 won.
“Profitability is likely to remain under pressure, as a higher share of BTS-driven revenue increases cost ratios, while album and tour-related expenses are recognized upfront,” said Lee Hyun-ji, an analyst at Eugene Investment & Securities.
Target prices for SM and YG have also been cut by about 30 percent over the same period, with estimates falling to as low as 120,000 won and 70,000 won, respectively.
silverstar@heraldcorp.com
