[Click eStock] "AfreecaTV, Profit Estimates Revised Downward and User Numbers Stagnant"... Target Price Lowered

[Asia Economy Reporter Lee Jung-yoon] Yuanta Securities announced on the 2nd that it lowered the target price of AfreecaTV from 230,000 KRW to 160,000 KRW, reflecting the decline in multiples of domestic and international platform companies and adjusting profit estimates due to increased costs such as labor expenses.

AfreecaTV's sales in the first quarter of this year rose 24% year-on-year to 75.3 billion KRW, and operating profit increased by 18% to 23.1 billion KRW. Operating profit fell short of market expectations due to increased labor costs and broadcasting rights fees. Lee Chang-young, a researcher at Yuanta Securities, explained, "Despite stagnation in Monthly Unique Visitors (MUV), platform service sales recorded 60 billion KRW due to an increase in average spending per paying user," adding, "Although the first quarter is an off-season for advertising, advertising sales grew significantly to 14.2 billion KRW due to continuous demand for content-type advertisements." He further stated, "However, operating profit margin fell by 1.5 percentage points to 30.6% due to increased labor costs from personnel growth related to new business initiatives."

AfreecaTV's platform service sales growth continues despite the easing of social distancing, and advertising for various content beyond games, such as travel and movies related to reopening, is increasing. It is expected that the strong season effect in the second quarter of this year will further improve the performance trend in the second quarter and the second half of the year. However, growth rate is expected to slow compared to the previous year due to the high base effect last year.

The researcher said, "Due to the platform's community nature with high user loyalty, performance improvement from the increase in ARPPU (Average Revenue Per Paying User) is expected to continue," but added, "However, for the multiple, which indicates future growth potential, to rise, an increase in the currently stagnant user base is necessary."

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