[Click eStock] "KakaoGames, Earnings Estimates Lowered... Target Price Set at 80,000 Won"

Hana Financial Investment Report

[Asia Economy Reporter Minji Lee] Hana Financial Investment on the 4th revised down the target price for Kakao Games by 15% to 80,000 KRW, reflecting a downward adjustment in earnings estimates. However, it maintained a buy rating, citing valid expectations for new releases in the second half of the year.

In the first quarter, Kakao Games reported sales of 226.3 billion KRW and operating profit of 42.1 billion KRW, up 104.7% and 169.8% respectively compared to the same period last year. However, due to the absence of new releases, the performance fell short of market expectations.

PC game sales continued to decline, decreasing by 24% compared to the previous quarter. Sales from Kakao VX and Senatechnology, which make up Kakao VX and other revenues, increased by 10.5% quarter-on-quarter, maintaining solid growth.

The effect of Odin's launch in Taiwan was reflected for only about three days in the first quarter, so despite recording sales of 50 billion KRW within a month of release, its contribution was minimal. Yoon Yeji, a researcher at Hana Financial Investment, said, “It is estimated that Odin recorded daily sales in the low 1 billion KRW range domestically in the first quarter.”

However, Odin recently reclaimed the number one spot in Google sales rankings following an update to its siege warfare content and a new stats update. Accordingly, Odin's average daily sales in the second quarter are expected to be in the high 1 billion KRW range. Additionally, Odin maintains about 70% of domestic traffic in Taiwan, and considering that the Taiwanese market size is less than 50% of Korea's, the average daily sales in the first quarter are projected to be in the low 1 billion KRW range. Odin aims to expand into Japan later this year.

Uma Musume is expected to be officially released within the second quarter. Although the company has not disclosed an official schedule, considering that Odin's official launch last year was two months after pre-registration ended, it is estimated to be released in the latter half of the second quarter. Researcher Yoon stated, “The company expects Uma Musume to rank within the top three in major sales, which implies daily sales in the mid to high 1 billion KRW range. Therefore, the initial daily sales estimate for Uma Musume has been revised upward from 500 million KRW to 1 billion KRW.”

Additionally, ‘Eversoul,’ a collectible RPG targeting success in the Japanese market, ‘Ares,’ an MMORPG, and a new title from XL Games are expected to be released sequentially this year. Researcher Yoon Yeji analyzed, “Although earnings estimates have been revised downward, the abundance of new releases in the second quarter and the second half, along with the success of Odin, are expected to serve as a foundation for continued investment in securing global IP.”

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