[Click eStock] "Krafton to Show Weak Q3 Performance... Attention Needed on New Release Success"

[Asia Economy Reporter Myunghwan Lee] DB Financial Investment announced on the 21st that it maintains a buy rating on Krafton but lowers the target price from the previous 310,000 KRW to 280,000 KRW, reflecting market conditions. It also predicted that the success of the new console game scheduled for release in December will determine the company's further growth.

DB Financial Investment expects Krafton's Q3 revenue this year to be 430.5 billion KRW, down 18% year-on-year, and operating profit to be 147 billion KRW, down 25%. These figures fall short of market estimates of 458 billion KRW in revenue and 161.1 billion KRW in operating profit.

By segment, the online division is expected to see significant growth compared to the previous quarter due to increased traffic from the free-to-play transition of the flagship title "Battlegrounds" and new business models leading to revenue expansion. On the other hand, the mobile segment is expected to underperform during the peak season due to the suspension of "Battlegrounds Mobile" service in India and the impact of China's game regulations on "Peacekeeper Elite." DB Financial Investment explained that costs remain largely unchanged, so the decline in earnings in Q3 will be influenced by decreased revenue from existing games.

DB Financial Investment emphasized the importance of paying attention to the success of Krafton's new release scheduled for December. Krafton plans to launch "The Callisto Protocol," which supports PC and console platforms, on December 2. DB Financial Investment pointed out that this will be an opportunity for the domestic game industry, which is centered on mobile, to test the possibility of success in the North American and Japanese console markets through the new release. They also analyzed that The Callisto Protocol holds significant meaning not only for Krafton but for the entire domestic game industry, and depending on its success, a re-rating could be possible.

Hwang Hyun-joon, a researcher at DB Financial Investment, advised, "There is a possibility of improvement in the situations in China and India, and above all, with 42 days remaining until the release of The Callisto Protocol, the recent stock price slump makes the valuation attractive enough," recommending a buy on Krafton.

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