[Click eStock] "Netmarble, Overvaluation to Ease Next Year Due to Success of Second Country"

Ebest Investment "Netmarble Target Price Raised from 120,000 KRW to 135,000 KRW"

[Image source=Yonhap News]

[Asia Economy Reporter Gong Byung-sun] Netmarble's new title, "Second Country," has succeeded in surpassing expectations in popularity, leading to predictions that the overvaluation based on next year's performance will be resolved. The third-quarter earnings for this year are also expected to surge. Ebest Investment & Securities has raised the target price for Netmarble from 120,000 KRW to 135,000 KRW, maintaining a "Hold" investment rating.

According to Ebest Investment & Securities on the 22nd, "Second Country," released this month, is driving unexpected success in five Asian countries. Previously, Ebest estimated that the combined average daily sales for the second quarter in these five Asian countries would be about 1.41 billion KRW, but due to the unexpected popularity, sales of 1.4 to 1.5 billion KRW are expected from the domestic market alone. Consequently, the estimated combined average daily sales for the second quarter in the five Asian countries have been significantly raised to 2.62 billion KRW.

The success of "Second Country" is expected to resolve the overvaluation of next year's earnings. Sung Jong-hwa, a researcher at Ebest Investment & Securities, explained, "Netmarble's stock price was excessively overvalued until last year and still somewhat overvalued this year," but added, "the overvaluation will be completely resolved based on next year's earnings."

For the second quarter of this year, although the sales forecast was raised due to the upward revision of "Second Country" projections, the operating profit forecast was slightly lowered because the marketing expense forecast was increased by 6.4% compared to before. However, from the third quarter onward, while the sales forecast for "Second Country" is expected to be significantly raised, the marketing expense forecast will only be slightly increased, leading to an overall upward revision of this year's earnings forecast. In the second half of the year, there are also scheduled releases of anticipated new titles such as "Seven Knights Revolution" and "Marvel Future Revolution," and "Seven Knights 2" is preparing for regional releases in major overseas markets.