[Click eStock] "Netmarble, Earnings Visibility and Growth Concerns... Target Price Down"

[Asia Economy Reporter Kwon Jaehee] On the 23rd, Kiwoom Securities maintained its investment opinion of 'Market Perform' on Netmarble and lowered the target price from the previous 100,000 KRW to 62,000 KRW.

Market Perform is an opinion given when the expected return over the next six months is within -10% to 10% compared to the average market return.

Jingu Kim, a researcher at Kiwoom Securities, said, "This target price reflects a positive assumption for Netmarble's profit recovery despite the short-term continuation of a deficit trend, and it is necessary to consider that a very favorable valuation was given by applying the highest price-to-earnings ratio (PER) that can be assigned to a game company."

He added that the initial quarterly average daily sales of The Seven Deadly Sins: Origin, expected to be Netmarble's key new release, were reflected as a very favorable estimate of 3 billion KRW based on the third quarter of 2023, and the possibility of delays in the release timing at this point should also be considered. Additionally, the assumption includes a favorable premise by reflecting the performance potential based on multiple new titles, adding other mobile game sales next year at about 500 million KRW in average daily sales compared to the previous year, excluding the main new title.

So far, Netmarble has pursued a strategy to promote sales and performance growth by releasing multiple mobile games, but it has faced issues with performance visibility and growth due to product lifecycle (PLC) management and sales sustainability problems.

Researcher Kim analyzed, "For Netmarble to solve these problems and pursue sustainable growth, it must establish a development direction that users want and adjust game quality and business models accordingly. In particular, it is judged that continuous investment in producing AAA-level new titles, which is a major interest of global game companies, is necessary to generate results on multi-platforms including consoles in the future."

He continued, "Netmarble's upside risk lies in the possibility of achieving better-than-expected results through the release of multiple new titles. When in-game videos based on multiple new titles are released in the future, these should be reviewed to check the performance level of each new title," and added, "Investors should also verify the sustainability of sales from the company's existing lineup and adjust their investment proportions accordingly."

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