HYBE: 步入阳光……下季度更光明

Min-Joo Kang+852 2123 2644minjoo.kang@bernsteinsg.com Robin Zhu+852 2123 2659robin.zhu@bernsteinsg.com Charles Gou+852 2123 2618charles.gou@bernsteinsg.com Price Target 400,000 KRW 352820.KS Hyrum Caesar+81 3 6777 6979hyrum.caesar@bernsteinsg.com Hybe: Into the Sun... a brighter quarter ahead Buy the dip, Hybe's earnings inflection is just beginning.Hybe is now trading at anattractive entry point, and we believe this is an opportune time to add the stock ahead of amuch brighter earnings trajectory. The stock has historically tracked operating margin trendsmore closely than revenue growth. While the market already appreciates Hybe's strong2026 revenue outlook, the key debate is whether it can sustainably achieve a double-digitoperating margin. This is no longer just a BTS comeback story - newer IPs are scaling fasterthan expected and broadening the earnings base. More importantly, Hybe has consistentlyproduced mid-sized successes, steadily deepening and diversifying its IP portfolio. Operating leverage kicks in as BTS returns to the stage.We modelled Hybe to generateroughly KRW 1.2tn in quarterly revenue in Q2 2026, with gross margin of c.36% andoperating margin of c.13%. While a higher concert revenue mix dilutes gross margin giventhe lower-margin nature of ticket sales, it significantly enhances operating leverage throughgreater revenue scale. BTS global tours should drive substantial merchandise sales, VIPpackages, memberships, and digital content monetization, all of which carry more attractivemargins. As a result, the "concert-plus-merch" model is likely to become a meaningful profitengine and support further operating profit margin expansion (Link). One Sky, One Sun...BTS remains the ultimate earnings driver.The obvious question iswhether the BTS tour marks the peak of BTS monetization. We think the answer is no. Whilethe upcoming world tour is set to drive a significant earnings acceleration, it is likely the BTSearnings contribution to continue. Based on recent dialogues among the BTS memberson the BangtanTV YouTube channel, a new BTS album in 2027 appears to be a possibility.Such an announcement would likely come as a positive catalyst to the market and extend theearnings runway beyond the current tour cycle. Hybe IP portfolio is increasingly diversified,but BTS remains its defining franchise. In many ways, the investment case remains simple:there are many stars in the Hybe universe, but there is still only one sun. Investment Implications We have anOutperformrating onHybe.We raised our 2026 EPS forecast by 2% to reflectstronger operating leverage. VALUATION COMPS TABLE DETAILS HYBE: INTO THE SUN... A BRIGHTER QUARTER AHEAD EXHIBIT 2:Hybe’s global tour unit economics stand apart, with lower local promoter take rates (~10% vs. 20-30%+for other labels), resulting in structurally higher margins. This concert unit economics analysis is based on high-level assumptions and rough internal estimates, not on official disclosures or audited figures. The numberspresented (including ticket revenue, costs, margins, attendance, pricing, and profit contribution) are illustrative in nature and are intended solely to help understandthe business model conceptually. Actual performance for any specific tour or show may differ materially from these estimates due to changes in pricing, venue mix,production scale, tax and fee structures, deal terms with promoters and partners, FX, and other operational or contractual factors. This analysis should not be reliedupon as a precise forecast or as a representation of the company’s actual or future financial results, and it should not be used as the sole basis for any investment,commercial, or strategic decision.Source: Bernstein estimates and analysis. APPENDIX - FINANCIAL FORECASTS EXHIBIT 13:Hybe: Cash Flow Statement BERNSTEIN TICKER TABLE I. REQUIRED DISCLOSURES References to "Bernstein" or the “Firm” in these disclosures relate to the following entities: Bernstein Institutional Services LLC(April 1, 2024 onwards), Sanford C. Bernstein & Co., LLC (pre April 1, 2024), Bernstein Autonomous LLP, BSG France S.A. (April 1,2024 onwards), Sanford C. Bernstein (Hong Kong) Limited盛博香港有限公司,Sanford C. Bernstein (Canada) Limited, SanfordC. Bernstein (India) Private Limited (SEBI registration no. INH000006378), Sanford C. Bernstein (Singapore) Private Limited,Sanford C. Bernstein Japan KK(サンフォード・C・バーンスタイン株式会社)and analysts employed by Société GénéraleAfrica Technologies & Services to produce Bernstein research under a Global Services Agreement in place between Bernsteinand Société Générale. Bernstein is part of a joint venture between Société Générale (SG) and AllianceBernstein, L.P. (AB). Unless specifically notedotherwise, for purposes of these disclosures, references to Bernstein’s “affiliates” relate to both SG and AB and their respectiveaffiliates. VALUATION METHODOLOGY Hybe Co Ltd We have valued Hybe at a price target of KRW 400,000 based on a DCF valuation