[Click eStock] "NCSoft, No Factors for Stock Price Increase in the Near Term"

Goal Reduced by 16% Compared to Previous Target

Hyundai Motor Securities analyzed on the 14th that NCSoft's first-quarter earnings will significantly decline. With the delay in the release of new titles, the stock price momentum is expected to be weak for the time being. Accordingly, the investment rating of 'Buy' was maintained, but the target price was lowered to 460,000 KRW.

Hyundai Motor Securities researcher Kim Hyun-yong stated, "First-quarter sales are expected to be 506.8 billion KRW, down 35.9% year-on-year, and operating profit is expected to plunge 77.8% to 54.1 billion KRW," adding, "Both sales and profits are expected to decline sharply due to the absence of new titles."

Researcher Kim explained, "The sharp drop in sales is due to Lineage W and Lineage 2M, excluding Lineage M, decreasing both year-on-year and quarter-on-quarter," and added, "Operating profit is also expected to shrink to one-fifth of the same period last year due to fixed-cost-type labor costs."

However, compared to the previous quarter, efforts to reduce labor costs (a decrease of 22.8 billion KRW due to the removal of incentives) and marketing expenses (a decrease of 11.6 billion KRW) are expected to result in a slight increase in operating profit despite the sales decline.

Researcher Kim pointed out, "This year's biggest new title, Throne and Liberty, is understood to have a difficult launch in the first half of the year as the optimal release timing is being coordinated due to the Western publishing contract with Amazon."

He analyzed, "Even assuming a release in the third quarter, meaningful performance improvement will likely be possible from the fourth quarter," and added, "Stock price momentum is expected to be absent for the time being."

He further added, "Reflecting the delay in the release of Throne and Liberty and the downward revision of Lineage mobile game sales, the 2023 EPS (earnings per share) forecast has been lowered, leading to a reduction in the target price."

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