[Click eStock] "DoubleU Games, Stock Still Undervalued Despite Stable Earnings"

[Asia Economy Reporter Ji-hwan Park] Cape Investment & Securities evaluated that despite stable earnings trends, the stock price of DoubleU Games has not risen above the bottom level. The investment opinion 'Buy' and the target price of 90,000 KRW were maintained.

Choi Jin-sung, a researcher at Cape Investment & Securities, stated, "After recording high earnings last year due to the COVID-19 effect, it is expected that the third quarter will not see high payment growth due to the base effect. However, sales and operating profit for the third and fourth quarters are expected to meet consensus results due to a favorable exchange rate environment."

He added, "The stock price of the subsidiary DDI, listed on the US Nasdaq, is maintaining the IPO price level, and earnings are also expected to continue steadily at the current level. The undervaluation appeal will continue. The funds raised from the subsidiary's IPO also sustain expectations for acquisitions of developers in genres other than social casino."

The third-quarter earnings are also expected to meet consensus. Third-quarter sales are forecasted at 161.1 billion KRW, a 7% decrease compared to the previous year. Compared to the previous quarter, it is expected to decrease by 4.6%. Operating profit for the same period is expected to be 51.9 billion KRW, a 4.9% increase from a year ago but a 0.9% decrease compared to the previous quarter. Choi Jin-sung said, "Stable earnings are expected to continue into the fourth quarter, and future earnings growth is anticipated through new in-house titles and acquisitions of game developers."

Along with stable earnings, the undervaluation appeal is expected to be continuously highlighted. Choi Jin-sung said, "Expectations for acquiring new developers through the funds raised from the subsidiary's IPO remain valid. Although short-term momentum is somewhat sluggish, the stock price is judged to be at the bottom."