[Click eStock] Krafton, Despite 9% Target Price Cut..."500,000 Won Easily Achievable"

[Asia Economy Reporter Park Jihwan] Hyundai Motor Securities announced on the 11th that although it maintains a 'Buy' rating on Krafton, the normalization of sales for Battlegrounds New State is delayed compared to initial expectations at launch, and the target price has been lowered by 9% from the previous level to 600,000 KRW. However, it is expected that the current stock price of around 380,000 KRW can rise to 500,000 KRW without difficulty.

Hyun-yong Kim, a researcher at Hyundai Motor Securities, said, "Q4 earnings are expected to show sales of 601.2 billion KRW and operating profit of 239.5 billion KRW, representing a 38.7% and 158.6% increase year-on-year," adding, "However, it is expected to fall short of market expectations by about 5%." The slower-than-expected pace of sales normalization for the new Battlegrounds New State is considered the reason for the consensus miss. However, this is attributed to the characteristics of the battle royale genre, and it is expected that profit growth will be driven this year as sales fully ramp up in the first half.

Following the recently acquired Subnautica title, the release of The Callisto Protocol in the second half of the year is seen as a step toward becoming a renowned console developer. With the steady seller Subnautica having sold 6 million copies cumulatively and The Callisto Protocol expected to exceed 10 million sales, Krafton is projected to be elevated to a major global console software company.

Aggressive investments and systematic business preparations are also underway, including PUBG Universe and non-fungible tokens (NFTs). PUBG Universe has begun full-scale content business expansion by launching a global animation project with producer Adi Shankar, following short films and webtoons. Currently, it is understood that they are in the stage of gathering production personnel, with visible results expected in 2023. Active consideration is also being given to mergers and acquisitions (M&A) of global production studios, including Hollywood, and in the event of a big deal, immediate re-rating is anticipated. Researcher Hyun-yong Kim said, "The NFT business is also being pursued internally with a concrete direction," adding, "It is expected to enter as a comprehensive NFT trading platform."

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