by Lee Seonae
Published 12 Apr.2022 10:42(KST)
[Asia Economy Reporter Lee Seon-ae] Krafton’s stock price is on a downward trend as securities firms predict that its first-quarter earnings will fall short of consensus.
At 10:40 a.m. on the 12th, Krafton’s stock price was trading at 270,000 KRW, down 4.09% from the previous trading day. During the session, it fell as low as 269,000 KRW, showing weakness.
On this day, Korea Investment & Securities forecasted that Krafton’s first-quarter earnings would fall short of market consensus.
Jung Ho-yoon, a researcher at Korea Investment & Securities, stated, “Krafton’s first-quarter operating profit is expected to decrease by 28.3% year-on-year to 163 billion KRW, falling 18% short of consensus,” while maintaining a neutral investment opinion.
With the removal of one-time expenses that occurred on a large scale in the fourth quarter, Krafton’s profit level is expected to recover to its usual level. However, Korea Investment & Securities’ analysis suggests that a conservative view should be maintained as New State, which was expected to drive performance growth in 2022, is still underperforming.
Researcher Jung pointed out, “We estimate the 2022 net profit at 603.8 billion KRW. Generally, applying a price-to-earnings ratio (PER) of 25 times, which is given to large game companies, results in a target stock price of 310,000 KRW, but since New State, the growth driver for 2022 earnings, has failed, this valuation is burdensome.”
He added, “The company’s strategy is to expand users and sales through marketing after a large-scale update in the second quarter, but since the initial success has already failed, actual results need to be confirmed. Although the recent announcement of active investment and research and development in new trends in the gaming industry such as VR, NFT, and Web 3.0 is positive, it will be difficult for this to be reflected in the stock price before the actual release of new titles.”
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