Netmarble Surpasses 200,000 Won Intraday Thanks to IPO... Investment Opinions Diverge

Impact of Major IPO vs. Valuation Pressure

[Asia Economy Reporter Song Hwajeong] Netmarble's stock price hit 200,000 KRW intraday, influenced by the success of Kakao Games and other IPOs. As market expectations shift to another major IPO, Big Hit Entertainment (Big Hit), interest in Netmarble is also expected to continue. However, due to the recent sharp rise in Netmarble's stock price, market investment opinions are divided.

As of 9:30 AM on the 4th, Netmarble recorded 196,500 KRW, up 1.03% (2,000 KRW) from the previous day. Netmarble rose more than 12% the previous day, reaching an all-time high of 202,000 KRW intraday. This is the first time Netmarble's stock price has surpassed 200,000 KRW since the end of 2017, its first year of listing. Netmarble has risen for three consecutive days recently. Compared to the yearly low of 80,000 KRW recorded on March 13, it has increased by more than 140%.

Netmarble's strong performance is largely influenced by major IPOs such as Kakao Games and Big Hit. Netmarble holds a 5.63% stake in Kakao Games, which recently set the largest subscription record in domestic IPO history. Additionally, Netmarble is the second-largest shareholder of Big Hit, which has entered the IPO schedule aiming for listing next month. Netmarble holds a 24.87% stake in Big Hit.

Due to these expectations, recent individual investor buying has led to a rise in stock price. The previous day, individual investors purchased Netmarble shares worth 30.3 billion KRW, making it the second most net-bought stock after Samsung Electronics Preferred shares. This week alone, individuals have bought Netmarble shares worth 54.5 billion KRW.

Market investment opinions on Netmarble are divided. The sharp recent rise has increased valuation concerns. Hyundai Motor Securities recently downgraded Netmarble's investment rating from 'Buy' to 'Market Perform.' Choi Jinseong, a researcher at Hyundai Motor Securities, explained, "Although the current stock price level is expected to continue until Big Hit's IPO, the 2021 price-to-earnings ratio (PER) of 31.3 times is somewhat burdensome. Excluding the value of investment assets, the core business value is also at about 22 times PER, so the investment rating was downgraded due to the high valuation."

Some securities firms have upgraded their ratings. Kiwoom Securities upgraded Netmarble's investment rating from 'Market Perform' to 'Outperform' the previous day. Kim Hakjun, a researcher at Kiwoom Securities, stated, "Due to the expected outstanding performance of overseas new releases amid the COVID-19 pandemic, the trend of earnings improvement that has continued since the first half is expected to persist. Along with this, the value of investment assets is rising, maintaining a better trend than ever," explaining the reason for the upgrade.

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