Absence of NewJeans could cost HYBE $27 million

NH Investment & Securities downgraded HYBE's share price by 4 percent, excluding NewJeans from projections due to ongoing disputes with former CEO Min Hee-jin.

Entertainment company HYBE's headquarters in Yongsan District, central Seoul, pictured on Thursday. [YONHAP]

NH Investment & Securities downgraded HYBE's target share price after the conglomerate's dispute with ousted CEO Min Hee-jin drove the financial firm to exclude girl group NewJeans from its projection.

The securities company, one of Korea's largest, slashed HYBE's share price by 4 percent, from 280,000 won ($213) to 270,000 won, in a report released Thursday. The calculation excluded potential sales of a full-length album NewJeans had previously planned to release in the fourth quarter of 2024 as well as a world tour and new music planned for 2025, which it had previously estimated would bring the company 10 billion won in operating profit for the second half of 2024 and 25 billion won for 2025 — around $27 million in total.

“Assuming the worse-case scenario with a conservative approach, we have lowered the company’s performance estimate under the premise of NewJeans’ absence,” NH Investment & Securities analyst Lee Hwa-jeong wrote.

“It is realistic to assume the worse-case scenario and later consider the possibility of NewJeans resuming activities given that former CEO Min and HYBE's conflict dramatically comes to a close,” Lee said.

HYBE has been embroiled in a legal battle with Min, who is the former CEO of its subsidiary label ADOR and NewJeans' producer, since April, when its leadership publicly accused her of trying to seize management control. She was ousted from the label's top position in August but has since been offered a board seat.

Girl group NewJeans attends the 2025 S/S Youser Collection during Seoul Fashion Week at the Dongdaemun Design Plaza on Sept. 3. [NEWS1]

The prolonged conflict has led to delays and cancellations across the schedule of NewJeans, which is signed to ADOR. Min said that a planned fan meet and greet had been canceled and production of the group's upcoming music had been halted after she was ordered to step down in an interview with the JoongAng Ilbo, an affiliate of the Korea JoongAng Daily, that was published earlier on Thursday.

HYBE confirmed the cancellation of the fan meeting and delay of production, blaming both on the former CEO's “delayed decision-making.”

NH Investment & Securities, nevertheless, concluded that the end to Min's feud with HYBE would eliminate uncertainties in the company's future, which would be healthy for the company's shares in the long term. Analyst Lee put high hopes on fan app Weverse's revenue streams in subscription and advertisements, the return of boy band BTS as a full unit in 2025 and profits from newcomer artists for HYBE's share price and earnings momentum.

NH estimated HYBE to have earned 524.1 billion won in revenue and 59.1 won in operating profit in the third quarter, down 6.6 billion won and 2.4 billion won, respectively, from its previous forecast. The amounts are 3 percent and 19 percent lower, year over year, due to disappointing album sales, but relatively newcomers BoyNextDoor and Enhypen put forward strong first-week sales while Le Sserafim, BTS's Jimin and Katseye climbed up Western music charts.

HYBE shares hit a 52-week low of 158,000 won on Sept. 23 — 12 days after NewJeans had asked the company to reinstate Min as ADOR’s CEO on an impromptu livestream — a decrease of 98,000 won from its 52-week high of 256,000 won logged on Jan. 11 of this year.

The firm closed at 172,900 won on Friday, up 1.77 percent from the previous session.

BY KIM JU-YEON [kim.juyeon2@joongang.co.kr]