[Click eStock] "Netmarble, Operating Value Expected to Rise with New Game Hits"

IBK Investment & Securities Report
Expecting 46.4% Growth in Operating Profit Next Year

[Asia Economy Reporter Minji Lee] IBK Investment & Securities maintained a buy rating and a target price of 150,000 KRW on Netmarble on the 1st, expecting external growth through new game releases and overseas expansion from the fourth quarter onward.

Netmarble has proven its competitiveness in proprietary IP, game development, and publishing with the success of 'Seven Knights 2.' Since 2018, it has launched more than two new games annually, including 'Harry Potter: Hogwarts Mystery,' 'Blade & Soul: Revolution,' 'The Seven Deadly Sins,' 'A3: Still Alive,' and 'Seven Knights 2.'

Seunghoon Lee, a researcher at IBK Investment & Securities, said, "'A3: Still Alive' and 'Seven Knights 2' are proprietary IPs, so there are no royalty costs, which has significantly contributed to profitability improvement." He added, "From 'Lineage 2: Revolution,' released in 2016, to 'Seven Knights 2,' released this November, various game genres currently account for a balanced share of sales, so sales are not expected to decline sharply in the future."

Netmarble is expected to pursue external growth through new game releases and overseas expansion from the fourth quarter onward. 'A3: Still Alive' has already been released in overseas markets, and 'Seven Knights 2' in the domestic market. This month, 'Marvel Realm of Champions,' developed by its subsidiary Kabam, is scheduled for release. In the first quarter of next year, the global launch of 'Blade & Soul: Revolution' is expected, and during the first half of the year, MMORPGs 'The Second Country' and 'Seven Knights: Revolution' are anticipated to be released. In the second half of the year, the MMORPG based on the Marvel IP, 'Marvel Future Revolution,' is also pending, so the momentum for new releases is expected to strengthen further.

Next year's sales are estimated at 3 trillion KRW, and operating profit at 409.5 billion KRW, representing growth of 16.9% and 46.4%, respectively, compared to the same period last year. Annual sales from 'Seven Knights' and 'Marvel Realm of Champions' will be reflected, and more than four new games based on major IPs are scheduled for release, so external growth is expected. The researcher said, "Netmarble is currently reflecting a premium due to the huge success of 'Lineage 2: Revolution,' expectations for expansion into China, and the rising corporate value of equity-invested affiliates," adding, "The operating value proportion is expected to increase with the success of new game releases."