[Click eStock] "AfreecaTV, Growth Recovery Reconfirmed... Earnings Improvement Expected"

Yuanta Securities maintained a buy rating and a target price of 110,000 KRW for AfreecaTV on the 1st, reaffirming the growth potential of the domestic and international e-sports markets and platforms due to a recovery in growth in the second quarter of this year.

AfreecaTV's second-quarter revenue rose 11.2% year-on-year to 86.7 billion KRW, and operating profit increased 1.9% to 23.6 billion KRW, exceeding market expectations.

Platform revenue reached 65.2 billion KRW due to increased per-user purchases of paid items by highly loyal users based on community services, such as enhanced personalization. Advertising revenue recorded 20 billion KRW, driven by the seasonal peak in advertising in the second quarter and a surge in content-type advertisements related to game leagues. Despite concerns about slowing advertising growth, overall operating profit margin rose by 2 percentage points from the previous quarter to 27.3%, even with increased production costs for game-related content and a surge in low-margin content-type advertising revenue.

Researcher Changyoung Lee of Yuanta Securities stated, "Many new games are expected to be released in the second half compared to the first half, and performance improvement is expected to continue due to the effect of the Hangzhou Asian Games, where e-sports was adopted as an official event for the first time, G-Star, and the advertising peak season in the fourth quarter." He added, "In terms of advertising quality, the proportion of major corporate advertisers such as Hyundai Motor, Samsung Electronics, and Apple is increasing, and AfreecaTV's revenue structure is diversifying with an increase in offline event advertisements and content production revenue through contract-based orders, moving beyond the existing online-centered model."

He further added, "This is interpreted as a situation where, amid user attrition on competing platforms, AfreecaTV's position as an e-sports platform is becoming more solidified, leading to increased platform revenue due to higher user loyalty, accompanied by a simultaneous increase in advertising revenue."

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