[Click eStock] "Krafton, Existing Lineup Sales Stabilized but Investment Appeal is 'Questionable'"

[Asia Economy Reporter Kwon Jae-hee] Korea Investment & Securities on the 13th issued a 'Neutral' investment opinion on Krafton.

Krafton's revenue recorded 523 billion KRW, up 17.8% from the previous quarter, and operating profit surged 625.6% to 311.9 billion KRW. PC revenue was 106.1 billion KRW, down 7.2% from the previous quarter. Although traffic increased significantly after PC became free, revenue decreased due to the use of G-coin included in the starter pack.

Mobile game revenue increased 30.4% from the previous quarter to 395.9 billion KRW. The peak season for China’s Peacekeeper Elite is the first quarter, and PUBG Mobile is also showing strong sales across all regions including India. New State's revenue is at a similar level to the fourth quarter.

Operating expenses were 211.1 billion KRW, down 47.4% from the previous quarter. Labor costs increased to 110.5 billion KRW, but 53.2 billion KRW of stock compensation reversal was reflected. Payment fees decreased 52.6% from the previous quarter to 55.9 billion KRW as the costs for hosting the global esports tournament held in the fourth quarter were removed.

Ando-young Ahn, a researcher at Korea Investment & Securities, said, "Payment fees, which were the main cause of the fourth-quarter earnings shock, are expected to stabilize at 50 to 60 billion KRW per quarter as the frequency normalizes after hosting esports events," adding, "However, it is still difficult to view the investment attractiveness as high based solely on stable sales from the existing lineup, so we maintain a neutral investment opinion."