[Click eStock] "NCSoft, Limited Earnings Improvement... Target Price Down"

Performance Improvement from Q4... 2024 Earnings Estimates Revised Downward

Yuanta Securities forecasted on the 10th that despite the release of new titles in the second half of the year, NCSoft's performance improvement would be limited. Accordingly, they maintained a 'Buy' investment rating but lowered the target price to 350,000 KRW.

Researcher Changyoung Lee of Yuanta Securities stated, "In the second quarter, sales dropped 30% year-on-year to 440.2 billion KRW, operating profit fell 71% to 35.3 billion KRW, and net income attributable to controlling interests plunged 75% to 29.9 billion KRW."

With no new game releases, existing games naturally declined, and especially due to the launch of competing mobile games, sales of 'Lineage 2M' and 'Lineage W' decreased by 11.1 billion KRW and 19.7 billion KRW respectively compared to the previous quarter, becoming the main cause of the overall performance decline. Increased marketing expenses to defend against sales decline also caused operating profit (margin) to plummet.

Researcher Lee viewed the possibility of performance improvement in the second half as low. He analyzed, "Although 'Blade & Soul 2' will be released in Japan and Taiwan in the third quarter, the new title 'Puzzle Up' will be launched globally, and the 'Guild Wars 2' expansion pack will be released on the 22nd, sales growth is expected to be limited," adding, "Due to increased marketing expenses, overall performance improvement is expected to be limited."

He added, "'Lineage 2M' and 'Lineage W' are expected to see meaningful rebounds in the fourth quarter with major updates," and "The domestic release of 'TL' in the fourth quarter is expected to improve overall performance."

Researcher Lee also stated that 2024 performance should be monitored. In the first half, NCSoft plans to release 'Battlecrush' (a brawl-type action game) and 'Blade & Soul S' (a collection RPG), which depart from the Lineage IP and MMORPG genre, and in the second half, they plan to launch 'Project G' (an RTS) targeting high ARPU users in North America and Europe.

He evaluated, "NCSoft's sales have been declining for four consecutive quarters due to the absence of new titles for a long period while preparing new titles outside of existing genres and IPs, and the successive release of competing games similar to the main revenue source, Lineage," and "We are lowering the 2024 earnings estimates."

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