[Into the Stock] Where Is the Bottom for Netmarble...

[Asia Economy Reporter Junho Hwang] "From 125,000 won (end of last year) to 63,400 won (26th)."

This is the current stock price trend of Netmarble, which perhaps even reflects its future. It is the result of factors such as the failure of new releases to hit big, delays in anticipated titles, and the occurrence of deficits. Although some may view this as a buying opportunity at a low price amid fading expectations for the metaverse, the response from the securities industry remains cold.

On the 29th, Hanwha Investment & Securities lowered Netmarble's target stock price to 75,000 won. From the 24th, they examined the anticipated titles of domestic game companies for the second half of this year through Gamescom 2022 held in Germany. In Netmarble's case, the six new titles originally scheduled for release in the third quarter of this year are observed to have been postponed to the fourth quarter. Researcher So-hye Kim stated, "Operating profit in the third quarter of this year may increase compared to the second quarter due to the reflection of ‘Seven Knights Revolution,’ but since the profit-generating capacity from existing games has significantly declined, a conservative approach is considered valid until meaningful confirmation of another hit new release is made."

Netmarble released ‘Seven Knights Revolution,’ its most anticipated title for the second half of this year, on the 28th of last month. Although it was a new release expected to play a significant role in resolving the second quarter deficit, it is currently ranking around 6th to 8th in Google Play sales. The estimated daily revenue is about 300 million to 500 million won, and a natural decline in sales is expected going forward.

The failure of new releases to hit big and delays in anticipated titles are weighing down this year’s performance trend. Researcher Hee-seok Lim from Mirae Asset Securities lowered Netmarble’s annual sales forecast by 7%. This was largely due to lowering the annual daily sales forecast for Seven Knights Revolution from 800 million won to 500 million won, a 38% reduction. He also noted, "Marketing expenses for multiple new releases in the second half of this year need to be raised by 11%, and considering the non-operating loss increase of 86 billion won in the second quarter due to foreign currency loan translation losses caused by exchange rate rises, operating profit is expected to turn to a deficit this year."

In the securities industry, the target stock price for Netmarble is generally set in the 70,000 won range, but Kiwoom Securities proposed a target price of 62,000 won, which is lower than the current stock price. This is interpreted as a sign of practically no expectations. Researcher Jin-gu Kim of Kiwoom Securities set the target price at 60,200 won per share, stating, "This figure applies the highest price-to-earnings ratio (PER) that can be assigned to a game company, projecting a scenario of continued short-term deficit and positive profit recovery." He emphasized, "It is necessary to confirm the sustainability of sales from Netmarble’s existing lineup and adjust investment proportions accordingly."

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