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Ador CEO Min Hee-jin speaks during a press conference held in Seocho-gu, Seoul, Thursday. (Yonhap) |
Analysts say that while the recent feud between Hybe Entertainment and its sublabel Ador could result in short-term fluctuations in Hybe's stock prices, any long-term effects on Hybe's performance will be limited due to Ador's limited contribution to Hybe's overall performance.
On Friday, shares of Hybe started at 206,000 won ($149) per share, a 11.7 percent drop compared to when the main bourse, Kospi, opened Monday, when they were 233,500 won per share, before the Hybe-Ador drama began to play out in public.
Analysts attributed the decrease in stock prices to growing concerns about potential disruptions to NewJeans' upcoming engagements. Ador is NewJeans' agency and a sublabel under the Hybe umbrella.
"The reason for the fall in share prices can be attributed to concerns about interruptions in the future activities of NewJeans -- a prominent K-pop group affiliated with both Ador and Hybe -- as well as concerns about the potential departure of Min Hee-jin from Hybe, who is a key producer there," said an analyst from NH Investment & Securities, in a report.
Regarding the recent drastic decline in Hybe's stock prices, analysts say in the short term that there will inevitably be fluctuations in Hybe's stock prices.
"As Min's influence was highly regarded by fans and the public, short-term stock fluctuations of Hybe's share prices are expected to increase -- as there is a high possibility of Min resigning," said an analyst from Korea Investment & Securities in a report.
"Fluctuations in stock prices are unavoidable in the process of assessing the prospects of NewJeans without Min Hee-jin," added an analyst from Hanwha Investment & Securities in a separate report.
Several analysts agreed that the long-term effects of the Hybe-Ador feud on Hybe's stock prices would be limited, as NewJeans is likely to continue their activities as planned.
"The most important thing, which is NewJeans' future performance, is likely to continue as planned as NewJeans' exclusive contract is owned by Hybe," said an analyst from eBEST Investment & Securities in a report.
Currently, Hybe owns 80 percent of Ador's shares, while Min owns an 18 percent stake.
Analysts added that the recent feud would also have little impact on Hybe's overall performance, due to Ador's limited contribution to Hybe.
"In 2023, Ador's contribution to Hybe's operating profit stood at 11 percent. This is related to the sales of albums and digital music following the release of two albums by NewJeans. Based on our estimations for 2024, Ador's contribution to Hybe's operating profit is expected to increase to 14 percent," said an analyst from NH Investment & Securities in a report.
"Even if NewJeans' activities are suspended in the second half of the year, it appears that it will result merely in a delay in the release of one album. The impact (of a possible NewJeans hiatus) on Hybe's 2024 performance is expected to be less than 10 percent," the report added.
