[Click eStock] "NCSoft, Earnings Growth Expected with 'Blade & Soul' and 'Aion' IPs"

Yuanta Securities Report

[Asia Economy Reporter Minji Lee] Yuanta Securities maintained a buy rating on NCSoft on the 8th and raised the target price by 7% from the previous level to 1.2 million KRW. Although the fourth-quarter earnings last year did not exceed market expectations, additional growth is expected through the intellectual property (IP) of ‘Blade & Soul (Bladesoul)’ and ‘Aion’.

In the fourth quarter of last year, NCSoft recorded sales of 561.3 billion KRW and operating profit of 156.7 billion KRW, up 5% and 11% respectively compared to the same period last year. Operating profit fell short of market expectations (167.2 billion KRW) due to delayed revenue decline from existing games and increased costs such as marketing expenses and labor costs.

As the revenue from existing games shows signs of stabilizing downward, the size of sales from the domestic release of ‘Bladesoul 2’ scheduled for the first quarter and ‘Lineage 2M’ in Taiwan and Japan is expected to determine the scale of the earnings rebound.

Researcher Changyoung Lee of Yuanta Securities explained, “The daily sales of domestic Bladesoul 2 in the second quarter were assumed to be 2.6 billion KRW, which is 70% of the first full month daily sales of Lineage 2M’s domestic release.” He added, “The decrease in domestic Lineage 2M sales due to the release of Bladesoul 2 is expected to be around 30%.” He further explained, “Bladesoul 2 mainly targets users in their 20s and 30s, different from the existing Lineage 2M user base, so this assumption is not excessive.”

Overseas (Japan and Taiwan) sales of Lineage 2M are estimated to reach 1.4 billion KRW in average daily sales this year, which is 50% of last year’s domestic sales. Taiwan had more than 200,000 monthly active users (MAU) for the PC game ‘Lineage 2’ in the past, and ‘Lineage M’ still ranks first in sales, showing high loyalty to NCSoft games. Considering that Japan also had more than 100,000 MAU for the PC Lineage 2 in the past, the potential for success is predicted to be high.

Researcher Lee said, “NCSoft has recorded cumulative sales of over 10 trillion KRW with just the IPs of Lineage 1 and 2,” and added, “Starting this year, the IPs of Bladesoul and ‘Aion’ will be added, making it a new year of stepwise growth.”

Console games, a major platform in the overseas gaming market, are also seeing an increase in massively multiplayer online (MMO) games, so game IP and MMORPG development capabilities are expected to have high competitiveness on console platforms in the future. Lee said, “The artist fandom platform ‘Universe,’ launched on the 28th of last month, also integrates digital game development and operation technology, which is expected to have a positive impact on the global expansion of game IPs,” and added, “Reflecting the increased valuation of global gaming companies, we are raising the company’s target price.”

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