[Click eStock] "Netmarble, Focus on Investment Asset Value Increase and New Release Momentum"

[Asia Economy Reporter Song Hwajeong] Shinhan Financial Investment raised the target price for Netmarble from 140,000 KRW to 160,000 KRW on the 21st, citing expected increases in investment asset value and new game momentum. The investment opinion was maintained as 'Trading Buy' for the short term.

Researcher Lee Moonjong of Shinhan Financial Investment stated, "The price-to-earnings ratio (PER) based on 2021 is 34.7 times, which seems expensive compared to the industry average of 25 times, but it is necessary to consider investment assets," adding, "The value of listed company shares held, such as HYBE and NCSoft, has stabilized upward, and due to issues like the listing of subsidiaries KakaoBank and Netmarble Neo, the discount rate on investment asset value was eased from the previous 30% to 15%."

New game momentum is also anticipated. 'Second Country' has been available for pre-registration since the 14th and is expected to launch in June. 'Second Country' is a game characterized by animation style reminiscent of the famous animation studio Ghibli. The researcher said, "Since it has a strong fan base, early success seems possible," and added, "It will be simultaneously released in major Asian regions such as Korea, Japan, and Taiwan, so if successful, sales could increase significantly." Additionally, popular IP-based games such as 'Seven Knights Revolution' and 'Marvel Future Revolution' are scheduled for release in the fourth quarter of this year, providing abundant new game momentum throughout the year.

However, the first-quarter performance this year is expected to slightly miss market consensus. Shinhan Financial Investment estimated Netmarble's first-quarter sales and operating profit at 600.1 billion KRW and 83.1 billion KRW, respectively. This represents a 3.8% decrease in sales and a 0.8% increase in operating profit compared to the previous quarter. The researcher analyzed, "Operating profit will slightly miss the consensus (86.7 billion KRW). Although 'Seven Knights 2' reflects a full quarter, a sharp sales decline from February is expected, resulting in sales similar to the previous quarter, and the flagship game 'Marvel Contest of Champions' is also underperforming, making a sales decline compared to the previous quarter inevitable." However, due to continued efficient marketing strategies, operating profit is expected to remain at a level similar to the previous quarter.