[Click eStock] "Pearl Abyss Raises Initial Sales Forecast for Red Desert... Target Price Up"

KTB Investment & Securities Report

[Asia Economy Reporter Minji Lee] On the 17th, KTB Investment & Securities downgraded its investment opinion on Pearl Abyss from "strong buy" to "buy" and raised the target price by 25% from the previous level to 500,000 KRW.

In the fourth quarter of last year, Pearl Abyss recorded a consolidated operating profit of 20 billion KRW, down 29% compared to the same period last year. This was about 46% lower than the market expectation of 36.9 billion KRW. The main reason was a 12% decrease in revenue from the IP due to the Black Desert Nova update on December 22, 2023, compared to the previous quarter.

Jingu Kim, a researcher at KTB Investment & Securities, said, "Marketing related to the update was proactively reflected, further limiting operating profit," and added, "For Black Desert Online, the effect of transitioning to self-service in North America and Europe will be fully realized from March this year, and with the internalization of revenue sharing and aggressive addition of new content, overall profit improvement is expected."

Regarding "Red Desert," scheduled for release in the fourth quarter of this year, initial sales are expected to reach 4.5 million copies, with cumulative sales over five years projected at 15 million copies. This sales forecast has been raised from the initial estimate of 2.5 million copies. Looking at major major games positioned in a similar genre to Red Desert, excluding "Ghost of Tsushima," which has been released for less than a year, the average initial sales and cumulative sales of five titles were 6.4 million and 19.8 million copies, respectively. Researcher Kim explained, "Ghost of Tsushima recorded 5 million copies sold in the first four months, but that was only for consoles," and added, "The initial sales forecast for Red Desert, which will be released simultaneously on console (3 million copies) and PC (1.5 million copies), is reasonable."

This year, Pearl Abyss is also expected to reveal the development progress of "Dokkaebi," a casual genre game. Since it is being developed with a next-generation proprietary engine, once a high level is confirmed, it is expected to drive the company's mid- to long-term profit growth after its release next year.

Researcher Jingu Kim said, "The fact that the development progress of Dokkaebi is being disclosed while the focus is on Red Desert development means that Red Desert development is proceeding smoothly," and added, "It will serve as a mechanism to increase market confidence in the company's development capabilities and the release schedule of major lineups."

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