[Click eStock] "NCSoft, Cost Instability... Target Price Downgraded"

Hyundai Motor Securities adjusted the target price of NCSoft down by 11% to 210,000 KRW on the 10th. The investment rating of "Buy" was maintained.

Hyun-yong Kim, a researcher at Hyundai Motor Securities, explained, "The target price downgrade reflects the weak first-quarter earnings and the sales gap before the release of new titles in the fourth quarter. Although there is an event of sequential disclosure of Aion 2 information starting from the second quarter, which could act as a short-term momentum, we believe that the success of new titles is essential for a sustained upward trend."

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NCSoft's first-quarter sales are estimated to have decreased by 4.2% year-on-year to 381.1 billion KRW, and operating profit for the same period is estimated to have decreased by 48.2% to 13.3 billion KRW.

Researcher Kim analyzed, "Sales are expected to remain similar in scale without a decrease quarter-on-quarter due to the three mobile Lineage titles as anticipated. However, on the cost side, one-time labor costs (estimated at around 15 billion KRW) and increased marketing expenses (due to the March update of Lineage M) are expected to result in a smaller-than-expected profit turnaround."

NCSoft is preparing to release five new titles in the second half of the year. The first half will mainly focus on regional expansions of existing titles such as Blade & Soul 2 in China and Lineage 2M in Southeast Asia. In the second half, the company plans to release three self-developed titles?LLL, Aion 2, and a spin-off of existing IP?as well as two publishing titles, Breakers: Unlock the World and Time Takers.

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