[Click eStock] "Netmarble, Hampered by High Marketing and Labor Costs... Target Price Down"

[Asia Economy Reporter Hwang Yoon-joo] Daol Investment & Securities stated on the 19th that Netmarble posted a loss in the first quarter of this year due to structural cost increases, maintaining a 'Buy' investment rating but lowering the target price from 120,000 KRW to 90,000 KRW.

Kim Ha-jung, a researcher at Daol Investment & Securities, said, "The operating loss in the first quarter was 11.9 billion KRW, turning to a deficit compared to the previous quarter and the same period last year."

Researcher Kim analyzed the cause of the loss as follows: "On the revenue side, the absence of major new releases, a sharp decline in sales of key lineups such as 'Je2-ui Nara' (The Second Country), marketing expenses at a level 17.9% higher than sales, and increased labor costs after the inclusion of SpinX contributed to the deficit."

Researcher Kim forecasted, "Marketing expenses are expected to rise further due to new releases from the second quarter onward, making it crucial to level up sales through new titles. Fortunately, there is potential for a turnaround in performance with two new releases in June and July (Seven Knights Revolution, Je2-ui Nara in Western markets)."

Regarding Seven Knights Revolution, the release date was postponed from the end of the first half to July. Researcher Kim pointed out, "The high number of competing new MMORPG releases domestically should be considered a risk."

As for Je2-ui Nara in Western markets, Kim evaluated, "Considering the strong appeal of the Ghibli IP (intellectual property) in Western regions, we assume an average daily revenue of 700 million KRW in 2022, and 1.6 billion KRW when combined with existing regions."

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