[Click eStock] "DoubleU Games, Insufficient New Releases and Growth Momentum"

New Release Success and Growth Momentum to Watch... Active M&A Seen Positively
EBest Investment & Securities "W Games Target Price Lowered from 85,000 KRW to 72,000 KRW"

[Asia Economy Reporter Gong Byung-sun] Ebest Investment & Securities has downgraded the target price of DoubleU Games. The reason is that its new releases and growth momentum are lacking compared to other companies.

On the 19th, Ebest Investment & Securities maintained a "Buy" rating for DoubleU Games but lowered the target price by 15%, from the previous 85,000 KRW to 72,000 KRW. The closing price on the previous day was 52,800 KRW.

The new release momentum is analyzed to be somewhat insufficient. By the end of the first half of this year, "Project G" is scheduled for release, and by the end of the second half, "Project N" and "Project K" are planned. However, it is noted that the success and performance of these titles need to be observed.

The connection with Play to Earn (P2E), which recently served as momentum for game-related stocks, is also weak. DoubleU Games' core content, social casino games, primarily targets the U.S. market. However, like Korea, the U.S. does not allow P2E games.

Sung Jong-hwa, a researcher at Ebest Investment & Securities, explained, "For genres other than social casino, services are being considered mainly in some Asian and European countries where P2E game regulations do not exist, but currently, specific details such as genre, development direction, and release schedule for new P2E titles have not been identified. At this point, the direct connection with P2E games is weak."

However, the active pursuit of mergers and acquisitions (M&A) is positive. DoubleU Games is pushing M&A centered on casual games in the North American market. DoubleU Games holds 400 billion KRW in net cash and has raised an additional 100 billion KRW. Researcher Sung said, "The plan to pursue M&A alone cannot be momentum, but whether momentum is created will depend on whether actual deals are concluded and the scale and synergy potential of those deals."

Meanwhile, Ebest Investment & Securities estimated DoubleU Games' Q4 sales last year to be 160.5 billion KRW, up 6.4% from the previous quarter, and operating profit to be 52.6 billion KRW, up 9.3% during the same period. These figures are generally in line with market consensus, falling 1.5% short in sales and exceeding by 1.35% in operating profit.