[Click eStock] "NCSoft, Q2 Looks Even Better"

Ebest Investment & Securities Report... Target Price Up 12%

[Asia Economy Reporter Minji Lee] Ebest Investment & Securities maintained a buy rating on NCSoft on the 13th and raised the target price by 12% to 950,000 KRW. This is based on the judgment that the second quarter will show better performance than the first quarter due to decreased labor and marketing costs.

In the first quarter, NCSoft recorded sales of 731.1 billion KRW and operating profit of 241.4 billion KRW, increasing by 37% and 71% respectively compared to the previous quarter, driven by a surge in Lineage 2M sales. Lineage 2M sales reached 341.1 billion KRW, soaring 137% from the previous quarter.

Researcher Jonghwa Sung of Ebest Investment & Securities explained, “Lineage 2M recorded an average daily revenue of 5.14 billion KRW in the fourth quarter after its service launch on November 27 last year, and in the first quarter, it recorded 3.75 billion KRW, showing a decline rate of only 8%, which is an unusually gradual downward setup speed.” He added, “This is because the game itself has the characteristic of long-term popularity, and the effect of the change in the item sales recognition method in the previous quarter was also added.”

The expected operating profit for the second quarter is estimated at 284.1 billion KRW, a 17% increase from the previous quarter. However, sales are expected to decrease by about 7% to 681.5 billion KRW.

Researcher Sung analyzed, “The decrease in sales is due to the downward setup pattern of major games in the absence of new releases,” and “Operating profit is expected to rise due to reductions in key operating expenses such as labor and marketing costs.” Lineage 2M’s marketing expenses recorded 40 billion KRW for two consecutive recent quarters but are expected to decrease significantly in the second quarter.

The downward setup process of Lineage 2M is expected to be stronger than in the first quarter, but the intensity of the decline is anticipated to be greatly mitigated by the siege battle update in the second quarter.

Researcher Sung stated, “Attention should be paid to the fact that Lineage 2M’s average daily revenue has stabilized at the mid-2 billion KRW level and that the downward setup speed of this game is unusually gradual,” and forecasted, “The release of Lineage 2 in the Asian market and Blade & Soul 2’s domestic launch in the third and fourth quarters will affect the stock price.”

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