[Click eStock] "Krafton, Focus on New Game Momentum in Second Half"

Hana Securities Report

[Asia Economy Reporter Minji Lee] Hana Securities initiated coverage on Krafton on the 12th with a buy rating and a target price of 350,000 KRW. This is based on the analysis that investor interest will be attracted whenever new game concretization momentum emerges.

Krafton's Q2 revenue was 423.7 billion KRW, and operating profit was 162.3 billion KRW, down 7.8% and 6.8% respectively compared to the same period last year. Q2 is a seasonal off-season due to the Chinese entrance exams, with PC and mobile revenues decreasing by 16.5% and 19.3% quarter-on-quarter, respectively.

Q3 is expected to see a rebound in PC and mobile sales quarter-on-quarter as it is a seasonal peak period. PC and console still maintain over 80% high user traffic, and it is expected that monetization will begin in earnest by introducing new business models such as skin workshops targeting the increased traffic. Contrary to market concerns, mobile is also expected to lead a sales rebound through collaborations with famous IPs like BLACKPINK.

This year's major new releases are the horror RPG "The Callisto Protocol," officially launching on December 2, and the turn-based strategy game "Project M," scheduled for early access this year. Both titles plan to unveil new in-game footage and trailers at Gamescom in Germany in August, after which more precise estimates are expected to be possible.

Yoon Yeji, a researcher at Hana Securities, explained, "The Callisto Protocol is recognized among gamers as a spiritual successor since the original creator of Dead Space participated in its production," adding, "It is being released timely during a gap in AAA-level horror RPG titles, and it is expected to sell 2 million copies in December alone, right after its release on December 2."

With substantial cash reserves, there is also ample potential for investments and acquisitions in game companies. Since Krafton holds the solid cash cow of Battlegrounds, appropriate M&A during this growth-needed period could be an opportunity for value rerating. Researcher Yoon Yeji estimated, "Krafton's cash and cash equivalents amount to 3.1 trillion KRW, securing the highest level of cash assets among domestic large-cap game companies," and added, "With global M&A experience, Krafton has the highest possibility of big deals among domestic companies."

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