[Click e Stocks] "NCSoft, Stock Expected to Remain Flat Amid Low Expectations for New Releases"

Target Price Lowered from 280,000 Won to 230,000 Won

Daishin Securities on the 8th downgraded the target price for NCSoft from 280,000 KRW to 230,000 KRW, citing disappointing performance of the new game leading to lower-than-expected earnings in the fourth quarter of last year. The investment rating was maintained at 'Marketperform.'

Ji-eun Lee, a researcher at Daishin Securities, explained, "The target price downgrade reflects a 16% reduction in the 12-month forward earnings per share (EPS) compared to the previous estimate, due to the poor performance of the recent new release 'Throne and Liberty (TL).'"

NCSoft's fourth-quarter earnings last year are expected to fall short of expectations. Lee said, "Fourth-quarter revenue is expected to be 454.5 billion KRW, down 17.1% year-on-year, and operating profit is expected to decrease by 84.3% to 7.5 billion KRW. While revenue is in line with market consensus, operating profit is expected to fall short." For PC, without any special updates to the existing five PC games, a natural decline in sales is expected along with poor contribution from TL due to its disappointing performance. Lee estimated, "The revenue contribution from TL in December, the month of its release, is approximately 7 billion KRW (based on the pre-order package price multiplied by an estimated initial user base of about 140,000)." She added, "Due to the poor domestic performance, the global combined earnings forecast after the 2024 global release has also been revised downward by about 45% compared to the previous estimate." On mobile, slight revenue rebounds are expected in the third quarter through updates to 'Lineage M,' 'Lineage 2M,' and 'Lineage W.' Daishin Securities estimated the average daily revenue for the fourth quarter for Lineage M, 2M, and W to be 1.3 billion KRW, 700 million KRW, and 1.1 billion KRW, respectively, representing increases of 3%, 15%, and 12% compared to the previous quarter. Marketing expenses are estimated to have increased by 64.3% quarter-on-quarter to 45.4 billion KRW due to the domestic release of TL in December and large-scale updates to mobile games.

The stock price is expected to remain flat due to low expectations for new releases following TL's poor performance. Lee said, "Given TL's poor domestic results, global success expectations have also significantly diminished. Although two mobile games (Battlecrush and BloS) are scheduled for release in the first half of next year, their contribution to earnings is expected to be low due to lower spending compared to existing mobile games." She added, "Due to the low expectations for new releases in the first half, the stock price is expected to remain stagnant."

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