[Click eStock] "Kakao Games, 2Q Overseas Sales Contribution ↑"

[Asia Economy Reporter Kwon Jae-hee] Hyundai Motor Securities on the 18th gave Kakao Games a 'Buy' rating with a target price of 110,000 KRW.

Hyundai Motor Securities selected Kakao Games as the top pick among mid-sized domestic game stocks, based on the judgment that stable profitability can be secured through the internalization of Odin's developer. Odin has maintained a stable second place in domestic sales rankings in 2022. The first-quarter sales of Odin are expected to be around 150 billion KRW, about a 25% decrease from the previous quarter. This means that the third-quarter sales since release reached about 45% of the first-quarter sales, which is a favorable figure comparable to the downward stabilization trend in sales of Lineage M and Lineage 2M during the same period.

Hyun-yong Kim, a researcher at Hyundai Motor Securities, analyzed, "Since Odin's developer was consolidated as a subsidiary from the fourth quarter, it is expected to enjoy a stable operating profit margin of 15-20% starting from the first quarter of this year."

Kakao Games' first-quarter sales are expected to be 261.4 billion KRW, with an operating profit of 49.4 billion KRW.

Overseas sales are also expected to accelerate in the second quarter due to the effect of Odin's launch in Taiwan. Odin was launched in Taiwan on March 29, and from the second quarter, the contribution of overseas sales is expected to increase significantly.

In the second half of the year, major anticipated titles such as XL Games' MMORPG, Eversoul (imported RPG), Guardians Order (action RPG), and Project Ares (action RPG) are lined up, so momentum is expected to increase following a pattern of low in the first half and high in the second half.

Researcher Kim said, "Due to stable profitability from Odin's internalization, increasing momentum from large new releases from the second quarter to the second half, and business diversification into NFT and metaverse, Kakao Games is recommended as the top pick among mid-sized domestic game stocks."

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