[Click eStock] "NCSoft Expected to Meet Q1 Earnings Expectations Despite COVID-19"

[Asia Economy Reporter Eunmo Koo] DB Financial Investment expects NCSoft to achieve results in the first quarter of this year that meet market expectations despite the impact of the novel coronavirus disease (COVID-19).

Hwang Hyun-joon, a researcher at DB Financial Investment, estimated in a report on the 24th that NCSoft's first-quarter sales this year will reach 704.2 billion KRW, a 96% increase compared to the same period last year, and operating profit will increase by 254% to 281.5 billion KRW, meeting market expectations. Researcher Hwang explained, "The strong performance is attributed to Lineage 2M," adding, "The traffic for Lineage 2M, which was released in November last year, remained steady in the first quarter, so the decline in sales is expected to be gradual, with daily sales estimated at about 3.5 billion KRW, down 31% from the previous quarter." Furthermore, he forecasted, "Other games such as Lineage M also continued to perform well, so despite increased operating expenses due to incentives and variable sales costs, profitability is expected to improve significantly."

Although there are concerns about fundamental damage to various sectors and companies due to the impact of COVID-19, NCSoft is evaluated to be only minimally affected. Researcher Hwang stated, "Even in the first quarter, which is within the influence of COVID-19, performance remained solid due to the success of Lineage 2M, and existing games showed stable performance without being eroded, increasing visibility for annual performance improvement," adding, "Moreover, the potential for global expansion of Lineage 2M and new game releases within the year remains valid."

The investment opinion and target stock price were maintained at 'Buy' and 840,000 KRW, respectively. Researcher Hwang explained, "The impact of COVID-19 on fundamentals is limited, and the recent stock price decline has lowered the price-to-earnings ratio (PER) based on this year's expected performance to 15 times, enhancing valuation attractiveness. Additionally, momentum such as regional expansion and new releases within the year remains valid."

This content was produced with the assistance of AI translation services.