[Click eStock] NCSoft Expected to Exceed Expectations in Q2 as Well

Healthy Lineage M, Recovering Lineage 2M... New Releases in the Second Half Also a Boon

[Asia Economy Reporter Minwoo Lee] NCSoft is expected to record earnings that exceed expectations in the second quarter as well. It is analyzed that the revenue flow of key games such as Lineage M and Lineage 2M is stabilizing, and expenses such as labor costs have sharply decreased compared to the first quarter, resulting in favorable performance.

On the 20th, Mirae Asset Daewoo maintained a 'Buy' investment rating on NCSoft and raised the target stock price by 6.6% to 970,000 KRW. Considering the situation up to mid-this month, they judged that the second quarter will record earnings exceeding expectations.

In fact, the daily sales flow of Lineage 2M, which was somewhat sluggish last month, is analyzed to have recovered this month. At the time of the first quarter earnings announcement, Lineage 2M's daily sales were about 4.2 billion KRW in the fourth quarter of last year and 3.8 billion KRW in the first quarter of this year. The predecessor, Lineage M, is also recording the best daily sales since 2020. The daily sales were 2.39 billion KRW in the fourth quarter of last year and 2.36 billion KRW in the first quarter, showing little change.

A synchronization phenomenon with game stocks on the US Nasdaq market is also appearing. Since the fourth quarter of last year, it has shown a similar trend to the stock price of Activision Blizzard in particular. Activision Blizzard is expected to have new release momentum with the upcoming launches of 'Call of Duty' new title, 'World of Warcraft' expansion pack, and 'Diablo Immortal' in the second half of this year. NCSoft is also preparing for overseas expansion of Lineage 2M to Japan, Taiwan, and other markets in the second half of this year. The new project TL beta test and the domestic release of Blade & Soul 2 are also being concretized. Additionally, expenses such as labor costs are expected to sharply decrease in the second quarter compared to the first quarter, which is also positive news. Accordingly, Mirae Asset Daewoo stated

The recent global game stock rally is interpreted as investors' interest in large game companies that own mega game content intellectual property (IP) such as NCSoft and Activision Blizzard. Changkwon Kim, a researcher at Mirae Asset Daewoo, explained, "Last year, global companies such as Google and Amazon started cloud gaming services, and in the second half of this year, Sony's PlayStation 5 and Microsoft's Xbox Series X, which have enhanced online connectivity and multiplatform functions, will be released," adding, "In this situation, NCSoft and Activision Blizzard are expected to have new release momentum continuing from the second half of this year through next year for the first time in several years."