[Click e-Stock] "NCSOFT Strengthens Casual and AdTech Capabilities with JustPlay Acquisition... Target Price Maintained"

On March 11, Hana Securities maintained its "Buy" investment rating and target price of 320,000 won for NCSOFT, stating that the acquisition of JustPlay GmbH is expected to improve profitability.

On this day, Lee Junho, a researcher at Hana Securities, commented, "Through the rapid internalization of AdTech (advertising technology) and casual game capabilities, profitability will be enhanced," explaining the reasoning behind the firm's view.

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The previous day, NCSOFT announced that it would acquire a 70% stake in the German gaming company JustPlay for 301.6 billion won. NCSOFT also holds a call option for the remaining 30% stake.

Researcher Lee explained, "JustPlay has a structure in which it distributes a portion of advertising revenue received from advertisers to users, thereby generating user acquisition and retention. Based on its capabilities in casual game development and AdTech, the company has been demonstrating rapid growth."

Last year, JustPlay recorded sales of 248 billion won, a 39% increase from the previous year, while net profit grew by 41% year-on-year to 22.7 billion won.

Researcher Lee projected that, after the acquisition is completed on April 30, around 206 billion won in sales from JustPlay will be reflected in this year's consolidated results. The operating margin is estimated to be around 20%, contributing approximately 40 billion won in profit.

Since establishing a Casual Center in August last year, NCSOFT has been accelerating its business transformation by consecutively acquiring companies such as Vietnam's LiHuHu and Korea's SpringComms. Additional mergers and acquisitions (M&A) involving casual genre studios are expected to continue in the second half of the year. NCSOFT has set a goal to expand the proportion of casual genre sales to one-third of total revenue by next year.

Researcher Lee emphasized, "With this acquisition, the visibility of NCSOFT's profit growth has increased further. Given that Lineage Classic and Aion 2 are also performing well, we recommend a buy approach."

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