[Click eStock] Krafton, New Release Momentum Difficult to Expect... Investment Opinion 'Neutral'

Samsung Securities Report

On the 14th, Samsung Securities maintained a neutral investment opinion and a target price of 200,000 KRW for Krafton, stating that it is difficult to expect new momentum from upcoming releases.

Krafton's second-quarter revenue is expected to decrease by 23.8% quarter-on-quarter as the seasonal effect is removed. PC revenue increased by 17% year-on-year due to increased traffic following the transition to free-to-play, but mobile revenue is projected to decline by 7.8% during the same period due to a downturn in the global mobile game market. BGMI resumed service in India in May, but revenue has not recovered to previous levels due to passive promotions. Operating profit is expected to decrease by 51.5% quarter-on-quarter as marketing expenses and one-time costs, which had been significantly reduced in the first quarter, normalize.

Krafton launched the strategic defense mobile game Defense Derby in six countries on July 6, but initial results appear to be modest. Several small-scale new titles are planned for release later this year, but their contribution to revenue is expected to be limited. Samsung Securities analyst Odonghwan Oh stated, “New release momentum will be limited until the launch of Blue Budget scheduled for the second half of next year. Although small-scale investments and publishing contracts are increasing, it will take time for these investments to translate into earnings.” The company has been increasing external investments to discover new growth engines, including a 22 billion KRW investment in Fast Track Asia in June and a 40.5 billion KRW investment this month in the U.S. independent game studio Gardens.

Analyst Odonghwan Oh explained, “It is positive that stable operating profit is being maintained through Battlegrounds, but since there are no major releases scheduled until the end of next year, the potential for further valuation increases is limited. To drive stock price growth, it will be necessary to secure additional growth engines, such as conducting aggressive mergers and acquisitions (M&A) using available cash or expanding the publishing lineup.”

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