[Click eStock] "Webzen, Full-Scale Earnings Recovery Expected in Q1"

[Asia Economy Reporter Jihwan Park] NH Investment & Securities maintained its 'Buy' rating and target price of 51,000 KRW for Webzen on the 5th, stating that although the company recorded sluggish performance in the fourth quarter of last year, it is expected to show a full-scale recovery starting from the first quarter.

Jaemin Ahn, a researcher at NH Investment & Securities, explained, "Last year, Webzen achieved significant performance growth by consecutively succeeding with 'MU: Arcangel' and 'R2M' in the domestic market." He added that the game 'Youngyo Daechunsa,' released on the 6th of last month, has secured a top position in the Chinese Apple App Store, and with the scheduled release of Jeonmin Gijeok 2 in the second quarter, positive momentum is expected to be maximized.

It is forecasted that the performance growth will continue this year due to the success of the new titles. Sales for next year are expected to reach 340.1 billion KRW, and operating profit 143.6 billion KRW, representing increases of 15.6% and 32.7% respectively compared to the previous year. In particular, for Youngyo Daechunsa and Jeonmin Gijeok 2, the structure is such that royalties are received by licensing the IP (intellectual property rights), and these are recognized as net sales, which is expected to prominently boost operating profit growth.

Researcher Ahn expressed expectations that although Webzen recorded sluggish performance in the fourth quarter of last year, it will recover again in the first quarter of this year. Webzen's fourth-quarter operating profit is expected to be 38.8 billion KRW, a 10.8% decrease compared to the previous quarter. This is explained by a decline in sales of MU: Arcangel and a 35.6% increase in labor costs due to incentives reflecting last year's favorable performance. Researcher Ahn forecasted, "In the first quarter, reflecting the performance of 'Youngyo Daechunsa,' operating profit is expected to increase by 5.4% from the previous quarter to 40.9 billion KRW."