[Click eStock] "Netmarble, Still High Valuation... Target Price Down 12%"

NH Investment & Securities Report

[Asia Economy Reporter Minji Lee] NH Investment & Securities maintained a buy rating on Netmarble on the 17th but lowered the target price by 12% to 132,000 KRW. This is due to delayed releases of games scheduled for launch this year, resulting in a lack of anticipation for new titles, and a decline in sales of games released last year compared to their initial performance.

Three new games that were not released last year (Seven Knights Revolution, BTS Dream: TinyTAN House, and Mwoji Kungya Island) are scheduled for release in the first half of this year, and the US subsidiary Jam City plans to launch the P2E (Play to Earn) game Champion Ascension within the year. Netmarble's new game showcase event, NTP, is also expected to be held in the first quarter, with additional games beyond those currently announced anticipated to be revealed.

Additionally, the subsidiary Netmarble F&C has established Metaverse Entertainment, which is expected to develop games and technologies related to the metaverse. Analyst Jaemin Ahn stated, “Last year, the company sold investment assets it held after acquiring SpinX Games, leading to growth in the core game business performance,” and added, “Considering the still high valuation, additional achievements in gaming are necessary.”

Netmarble’s fourth-quarter earnings are projected to record sales of 730.4 billion KRW and operating profit of 54.8 billion KRW. While sales are expected to increase by 17% compared to the previous year, operating profit is forecasted to decrease by 33%, falling short of the market estimate of 77.5 billion KRW. Although the performance of SpinX Games, acquired last year, will be reflected in consolidated results starting from the fourth quarter, aside from the global release of Seven Knights 2 in the fourth quarter, there are no new titles, so sales growth from existing games is expected to be limited.