[Click eStock] NCSoft's Sales Forecast Lowered, Target Price Down... Focus on New Releases in the Second Half

[Asia Economy Reporter Myunghwan Lee] Korea Investment & Securities announced on the 29th that it expects a decline in sales for NCSoft due to delays in new game releases, lowering the target stock price from the previous 920,000 KRW by 23.9% to 700,000 KRW. However, the investment rating was maintained as "Buy."

Korea Investment & Securities forecasts the company's sales for the first quarter of this year to be 701.6 billion KRW, a 36.9% increase compared to the same period last year, and operating profit to be 172.7 billion KRW, a 204.4% increase year-on-year. By segment, mobile game sales are estimated to have decreased by 11.7% from the previous quarter to 532.1 billion KRW. Researcher Hoyoon Jung of Korea Investment & Securities stated, "Sales of Lineage M and Lineage 2M will continue to decline naturally, and Lineage W will also see a decrease in sales as the initial launch effect fades."

Operating expenses are expected to decrease by 18.3% from the previous quarter to 528.9 billion KRW. One-time incentives incurred in the last fourth quarter have been removed, resulting in personnel expenses dropping by more than 10% from the previous quarter to 223.2 billion KRW. Marketing expenses are also predicted to decrease significantly.

Researcher Jung explained the reason for the target price reduction, saying, "We reflected the downward revision of sales estimates due to delays in releases such as Aion 2, which was originally expected to launch this year, and also revised upward costs such as marketing expenses and incentives compared to previous estimates."

Korea Investment & Securities' analysis suggests that expectations can be placed on NCSoft's new releases scheduled for the second half of the year. 'Lineage W,' combined with blockchain technology, is set to launch in North America, Europe, and South America during the third quarter. In the fourth quarter, a new intellectual property (IP), 'Project TL (Throne and Liberty),' will be released on PC and console platforms. Previously, the teaser video for Project TL, released last month, received positive reviews from users.

Additionally, NCSoft has unveiled various game lineups including Project E, Project R, and Project M. These are expected to be released sequentially starting from 2023. Researcher Jung analyzed, "Project TL and Project E will be released on PC and consoles, and through these, NCSoft will actively target the North American and European markets, where domestic game companies have not achieved significant results."

He added, "There is still no disagreement that NCSoft's current stock price is undervalued," and emphasized, "Attention should be paid to the performance of new releases scheduled for the second half of the year and beyond."

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