[Click eStock] "Kakao Games, Strong New Release Momentum... Presented as Next Year's 'Top Pick'"

SK Securities Report

[Asia Economy Reporter Myunghwan Lee] SK Securities announced on the 13th that it maintains a buy rating and a target price of 50,000 KRW for Kakao Games. This is due to the expectation of strong performance from new releases scheduled for 2023.

SK Securities assessed that the number of new titles Kakao Games plans to release next year is relatively high compared to other game companies of similar scale. They also analyzed that the anticipation for these upcoming releases is reasonable, and the momentum from new titles will contribute to stock price growth.

Specifically, "Eversoul," a subculture mobile collection RPG scheduled for release in January next year, recently surpassed 1 million pre-registrations. The mobile MMORPG "ArcheAge War" is expected to launch in the first quarter of next year. Additionally, "Ares: Rise of Guardians" is planned for release in the second quarter, and "Gadis Order" in the third quarter. With new titles scheduled for each quarter starting from Q1 next year, SK Securities anticipates gradual revenue growth.

SK Securities also noted that controversies surrounding the operation of Kakao Games' "Uma Musume" have already been sufficiently reflected in the market. They pointed out that the revenue decline stabilization in Taiwan for the flagship title "Odin" has also been largely absorbed. They expect that the decrease in Odin's revenue share will reduce negative views regarding the listing of its subsidiary Lionheart Studio.

Due to recent growing concerns in the blockchain gaming industry, SK Securities believes Kakao Games could benefit from a positive spillover effect. The blockchain gaming sector has been facing worries following the delisting of Wemade's virtual asset "Wemix" and the bankruptcy filing of FTX, the virtual asset exchange where Com2uS's "C2X" is listed. In contrast, Kakao's virtual asset "Bora" remains listed on major domestic exchanges, making Kakao Games the only major domestic game company expected to smoothly advance its blockchain business next year, according to SK Securities.

SK Securities projects Kakao Games' revenue for next year to increase by 17% year-on-year to 1.38 trillion KRW, with operating profit growing 65% to 304.6 billion KRW. Researcher Sojung Lee of SK Securities explained, "With the Odin siege update and Uma Musume's domestic half-anniversary event scheduled for Q4 next year, and the concrete schedule for 2023 new releases, we maintain a buy rating and a target price of 50,000 KRW."

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