HYBE CEO Refutes Financial Concerns, Highlights Strong Cash Reserves

HYBE's CEO, Lee Jae-sang, recently addressed internal concerns regarding the company's financial health, asserting that HYBE holds a substantial cash reserve of 1.2 trillion KRW. During a company-wide town hall meeting on the 14th, Lee reassured employees about the company's robust financial status, stating, "HYBE's business is performing well numerically, so there is no need for concern." The town hall serves as a regular platform for the CEO to share the company's vision with its members.

Lee also emphasized the importance of 'Team HYBE,' encouraging employees to support each other with kind words. Addressing controversies surrounding the subsidiary ADOR, the group NewJeans, and former ADOR CEO Min Hee-jin, he stated, "We are handling matters based on principles and rationality. Trust and patience will unravel the issues one by one."

Industry insiders interpret Lee's remarks as a response to financial concerns, including the 400 billion KRW convertible bond (CB) repayment risk. His comments aim to alleviate internal anxiety stemming from these issues.

The 'available cash assets' mentioned by Lee include cash, cash equivalents, and other liquid financial assets. According to HYBE's 2024 semi-annual report, the company holds approximately 1.0745 trillion KRW in available cash assets, comprising 321.4 billion KRW in cash and cash equivalents and 753.1 billion KRW in other liquid financial assets. The 1.2 trillion KRW figure likely includes improvements from the third-quarter performance.

Additionally, HYBE successfully issued a 400 billion KRW CB on the 15th, securing repayment funds three weeks ahead of the original CB maturity date. The CB premium rate was set at 20%, a 5% increase from the previous issuance, yet the process proceeded smoothly, indicating market confidence in HYBE's growth potential and stock price appreciation.

A securities industry insider commented, "The successful CB issuance reflects the market's positive assessment of HYBE's growth prospects and stock price potential." Another analyst noted, "Despite some noise, HYBE's financial situation is positive. While some criticize the company's debt, leveraging debt for cash and investment is a crucial driver of corporate growth."

The market's optimistic view of HYBE's profitability stems from expectations of improved future performance. Industry forecasts suggest that the yet-to-be-disclosed third-quarter results will show growth compared to the second quarter. According to FnGuide, HYBE's second-half operating profit forecast (average of securities firms' estimates) is 151.2 billion KRW. Although a year-over-year decline is expected, quarterly recovery has been consistent since the first quarter.

Group SEVENTEEN's performance has been a significant contributor. According to Hanteo Chart, SEVENTEEN's mini 12th album 'SPILL THE FEELS,' released on the 14th, sold 2.49 million copies in a single day, surpassing the 2.26 million copies sold on the first day of their April release, '17 IS RIGHT HERE.'

The growth of BOYNEXTDOOR, under the subsidiary KOZ Entertainment, is also noteworthy. Their EP 3rd album '19.99,' released in September, recorded 750,000 initial sales, with 600,000 copies sold on the first day. This marks an increase from their April EP 2nd album 'HOW?' which sold 530,000 copies initially and 390,000 on the release day.

According to industry sources, HYBE places significant value on the achievements of CAT'S EYE, which debuted in June and has performed well on domestic and international music charts like Billboard, Spotify, and Melon. During the town hall meeting on the 14th, HYBE shared success stories and examples of division and collaboration involving CAT'S EYE.

Lee Min-kyung, Ten Asia Reporter 2min_ror@tenasia.co.kr