NC's Challenging 3Q: The Key to Emperor Stock's Comeback is 'Lineage W'

3Q Operating Profit Expected to Halve Year-on-Year... Lineage W Launch in 2 Weeks Is Key
"Must Surpass Previous Success Level Due to Changed Payment Method"

[Asia Economy Reporter Minwoo Lee] NCSoft, which faced numerous setbacks including the failure of new releases, is expected to report poor performance in the third quarter of this year. Attention is focused on whether 'Lineage W,' set to launch in two weeks, can serve as a turning point amid stagnant stock prices.

As of 11:28 AM on the 26th, NCSoft's stock price rose 0.96% from the previous day to 628,000 KRW. After hitting an intraday low of 555,000 KRW on the 12th, it rebounded to the 600,000 KRW range but still shows a sluggish trend. Since the disappointing response following the release of the new title 'Blade & Soul 2' in August, the stock price has plummeted vertically from the 850,000 KRW range to the 600,000 KRW range and has struggled to recover.

The third-quarter performance this year is also expected to be weak. According to financial information analysis firm FnGuide, NCSoft's consolidated earnings forecast (consensus) for the third quarter of this year is 562.3 billion KRW in sales and 127.9 billion KRW in operating profit. Compared to the same period last year, sales are down 3.90%, and operating profit has fallen by 41.25%. Korea Investment & Securities even predicts that NCSoft's consolidated operating profit for the third quarter will be 103.2 billion KRW, less than half of the previous year's figure.

Domestic 'Lineage 2M' sales have significantly decreased, and due to the box office failure of Blade & Soul 2, mobile game sales are expected to decline compared to the previous quarter despite a rebound in 'Lineage M' sales. Operating expenses are expected to decrease compared to the previous quarter, but this is seen as an effect of reduced app store fees due to the decline in mobile sales.

The performance of Lineage W, which will be released on the 4th of next month, is crucial to overcoming this slump. Since the company has pledged to significantly reduce the criticized payment methods, ordinary levels of success will inevitably result in continued poor performance.

Due to this uncertainty, securities firms are lowering target prices and refraining from making aggressive investment recommendations. Early this month, eBest Investment & Securities lowered NCSoft's target price from 700,000 KRW to 640,000 KRW. This is about a 10% cut just two months after lowering it from 1,090,000 KRW to 700,000 KRW at the end of August. KB Securities also reduced its target price by about 18%, from 960,000 KRW to 790,000 KRW.

Jung Hoyoon, a researcher at Korea Investment & Securities, explained, "The success formula that drove NCSoft's growth has collapsed, so if Lineage W succeeds, it means NCSoft has found a new answer. However, it is still cautious to hold optimistic views that it will perform well unconditionally as in the past, so a conservative perspective will be maintained until the actual performance of Lineage W is confirmed."