[Click eStock] "AfreecaTV, Valuation Re-rating Expected Upon Confirmation of Investment Performance"

Meritz Securities maintained a buy rating and a target price of 120,000 KRW on AfreecaTV on the 19th, stating that once the performance of the first half investments begins to be confirmed, it will lead to a valuation rerating.

AfreecaTV's consolidated sales for the third quarter of this year are expected to reach 92.5 billion KRW, a 13% increase compared to the same period last year, and operating profit is projected to be 24.4 billion KRW, up 19%, meeting market expectations.

Researcher Lee Hyo-jin of Meritz Securities explained, "Despite the third quarter being an advertising off-season, the level is maintained similar to the second quarter, and the donation economy is presumed to follow a similar trend. However, advertising in the third quarter slightly declined, reflecting the pro-rata calculation and net sales recognition of consolidated subsidiaries."

She added, "Content advertising tends to be weekly in nature and is concentrated in the fourth quarter to align with advertisers' requests, so related matters were reflected as quarterly adjustments in the second half. The Hangzhou Asian Games will be held on September 23, and since esports is adopted as an official event for the first time in an international competition, if the AfreecaTV platform, specialized in gaming, benefits from increased traffic, it will serve as an incentive to raise expectations for the third quarter donation economy performance."

The current factor driving the stock price is the improvement in earnings. Furthermore, if valuation uplift factors come into play, momentum is expected to strengthen further. This year, AfreecaTV launched the Vietnamese platform OnLive and acquired the digital marketing company CTTD. The researcher stated, "If the former is a factor enabling valuation expansion through overseas expansion, the latter corresponds to a domestic-focused earnings improvement factor that expands the advertiser pool to non-gaming companies and advances advertising products. The attractiveness of the stock price has increased solely due to the rise in earnings per share (EPS) driven by bottom-out in traffic and advertising improvements."

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