A securities firm in South Korea predicted that the dispute between Korean agency HYBE and ADOR and K-pop group NewJeans’ CEO Min Hee-jin will have limited impact on HYBE’s performance especially with the comeback of BTS next year.
NH Investment & Securities has issued a stock report on April 23 analyzing the dispute between the two parties.
The report estimated that ADOR’s contribution to HYBE’s operating profit this year will be at 14 percent, saying that even assuming the worst case scenario, it will have limited impact on HYBE’s performance, Korean media outlet Maeil Business Newspaper reported.
NewJeans (X)
HYBE Chairman Bang Si-hyuk (left) and ADOR CEO Min Hee-jin (HYBE)
Lee Hwa-jeong, a researcher at NH Investment & Securities, explained that the 14 percent contribution was calculated by taking into account the three albums (single in May, Japanese single in June, and regular album in the second half of the year) by ADOR’s NewJeans, and plans for two performances at Tokyo Dome in Japan.
“Last year, Adore’s contribution to Hive’s operating profit was 11 percent. For reference, next year, as BTS’ full activities resume, its contribution is expected to decrease further,” the researcher said.
He said if ADOR’s management, including Min Hee-jin, does not respond to HYBE’s audit questionnaire by deadline on April 23, HYBE, the largest shareholder in ADOR at 80 percent, will take legal action including requesting a preliminary injunction to hold a general shareholders' meeting.
Min Hee-jin owns 18 percent of ADOR.
“Unless there is a separate request from ADOR, HYBE will support NewJeans scheduled activities to proceed normally, and from ADOR’s perspective, it is unlikely that NewJeans will stop the planned comeback. As there is only about a month left until the comeback date, there is not much benefit from suspending activities,” he said.
Lee Hwa-jeong said even if NewJeans’ activities are suspended in the second half of the year, it is expected that it will only be a setback in the release of one regular album in the second half of the year.
“The impact on this year’s performance is less than 10%, and most concerns about performance disruptions have already been reflected in the stock price,” he said.
In addition, Ahn Do-young, a researcher at Korea Investment & Securities, said “NewJeans has signed an exclusive contract with ADOR, and as long as HYBE owns 80 percent of ADOR, NewJeans continues to be HYBE’s intellectual property (IP).”
He added that “NewJeans has already formed a solid fandom through two years of activity since its debut, and we must consider that they are fans of NewJeans, not fans of producer (Min Hee-jin).”
“Both HYBE and ADOR do not want NewJeans’ IP to be damaged, so it is unlikely that album activities scheduled to be released in May or June will be affected,” he added.
Meanwhile, HYBE CEO Park Ji-won sent an email to employees regarding the issue and confirmed that there is an attempt for company takeover.
“However, in this case, an attempt to take over the company was clearly revealed, so we began an audit to confirm and correct this. If certain details that have already been confirmed inside and outside the company are further revealed through this audit, the company announces that it will take clear action against the responsible parties,” he said.
He said, “Currently, the responsible entities are not responding properly to the company's legitimate audit or are refusing to respond, and most of the claims they make are simply untrue or unfounded claims. We have come to understand that the issues currently being raised are pre-planned contents regardless of the timing of ILLIT’s debut, and the company will confirm these details in more detail through this audit and take action accordingly.”.
To ADOR employees, he said, “The company is well aware that ADOR members have faithfully performed their duties in their respective positions. Therefore, I think you are more anxious about this issue than anyone else. We ask you not to feel anxious and to do your best in your current role for the comeback and growth of NewJeans.”
About Belift Lab, ILLIT’s agency, employees, he said, “The company knows better than anyone else what efforts you have made for ILLIT’s debut. You may be upset by the sudden news, but we ask that you not be offended by untrue content and work hard to make ILLIT successful.”