[Click eStock] Netmarble's New Release Hits, but Stock Price Says 'Well...'

A3 Was a Hit but Marketing Costs Increased... Additional New Releases Needed for Success

[Asia Economy Reporter Minwoo Lee] There is a forecast that Netmarble's stock price still underperforms the market return. Although the new release 'A3' launched earlier this year is doing well, the revenue from existing games is declining, indicating a need for additional successful new releases.

On the 6th, Daishin Securities issued an investment opinion of 'Underperform' for Netmarble. While the first-quarter performance was relatively solid, further growth factors are needed.

In fact, Daishin Securities' forecast for Netmarble's first-quarter expected results are sales of 553.9 billion KRW and operating profit of 47.8 billion KRW, representing increases of 16% and 41% respectively compared to the same period last year. These figures are close to the market consensus of sales of 556 billion KRW and operating profit of 48.8 billion KRW. The mobile game 'The Seven Deadly Sins: Grand Cross,' globally released on the 3rd of last month, is estimated to have generated 70.5 billion KRW in revenue, a 42% increase compared to the previous quarter. Including sales from South Korea and Japan where the game was already released, daily sales are expected to stabilize downward at 1.3 billion KRW in the second quarter and 900 million KRW in the third quarter. The mobile game A3, released on the 12th of last month, is also estimated to have daily sales of 400 million KRW this month, expected to stabilize at around 300 million KRW thereafter.

However, it was pointed out that attention is needed due to declining revenue from existing games and increased marketing expenses for new releases. Minah Lee, a researcher at Daishin Securities, explained, "While most existing games such as Lineage 2 Revolution, Marvel Contest of Champions, and Blade & Soul Revolution are expected to see revenue declines, marketing expenses in the first quarter will increase by 32% year-on-year to 83.1 billion KRW due to new releases," adding, "Except for Blade & Soul Revolution Global, since the new releases for the first half of the year have been completed, additional successful new releases are necessary for valuation normalization and stock price rebound."