Netmarble Is Considering on Issuing EB Worth 250 Billion Won Backed by Its Stake in HYBE

• According to the local media, Netmarble is considering on issuing exchangeable bonds (EB) worth about 250 billion won backed by its stake in HYBE.

• The potential EB issue is likely to be slightly positive on Netmarble and slightly negative on HYBE (mainly due to additional shares that could be sold in the market).

• We are Negative on BOTH Netmarble and HYBE. Their valuations are not attractive. Plus, HYBE could face a major negative issue of its founder Bang Si-hyuk who could be jailed.