[Click eStock] "DoubleU Games, Record High Earnings and Subsidiary Listing Momentum... Target Price Up"

[Asia Economy Reporter Eunmo Koo] Shinhan Financial Investment has raised the target price for DoubleU Games, expecting improved earnings in the second quarter of this year along with the planned Nasdaq listing of its subsidiary.

On the 10th, Shinhan Financial Investment forecasted that DoubleU Games' average daily payment amount in the second quarter of this year will increase by more than 20% compared to the first quarter average. Last month, the sales rankings of major games such as DoubleU Casino and DoubleDown Casino slightly rose compared to April (DoubleU April 63rd → May 56th, DoubleDown April 22nd → May 20th). Researcher Moonjong Lee of Shinhan Financial Investment stated in the report, "It was already revealed in the first quarter earnings announcement that the average daily payment amount in April increased by 30% compared to the first quarter, and the May payment amount is understood to be similar to April," adding, "Although the normalization of the U.S. economy continues, considering the high retention rate of social casinos, second-quarter sales are expected to grow by 21.5% quarter-on-quarter."

Along with continued earnings improvement, the subsidiary's Nasdaq listing has also been confirmed. The subsidiary 'DDI' is scheduled to be listed on Nasdaq on the 1st of next month. Although the public offering price has not been finalized, considering the valuation of the listed competitor 'SciPlay,' it is evaluated that a high valuation listing is possible. The researcher analyzed, "SciPlay's enterprise value to EBITDA (EV/EBITDA) ratio was 11.6 times based on the 2020 market value, and applying the same valuation, DDI's value is 1.7 trillion KRW. Considering the higher EBITDA margin and sales growth rate compared to competitors, there is a possibility of being valued even higher." He added, "After the IPO, DoubleU Games' stake in DDI will be 57.3%, which can explain nearly 80% of the current market capitalization in terms of equity value."

The target price was raised by 15.8% to 88,000 KRW. The researcher explained, "This reflects the confirmed Nasdaq listing and the increase in the value of peer companies used as a basis for corporate valuation," adding, "While a sharp earnings improvement is expected in the second quarter, there is also momentum from the subsidiary's listing, and the parent company's games, which had relatively limited growth, are showing increased payment amounts after COVID-19, so a revaluation of the parent company's value is also expected after the subsidiary's listing."

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