[Click eStock] Kakao Games, Uma Musume Sales Decline... Target Price Downward Revision

[Asia Economy Reporter Lee Jung-yoon] Hana Securities announced on the 27th that it has lowered the target price for Kakao Games from 80,000 KRW to 70,000 KRW due to downward revisions in revenue for Umamusume Pretty Derby and an increase in payment commission rates. However, the buy rating was maintained as profit improvement is expected next year.

Yoon Ye-ji, a researcher at Hana Securities, explained, "The main momentum for Kakao Games in the second half of this year is expected to come from new releases and updates to existing titles."

For Odin: Valhalla Rising, a siege update is scheduled for the fourth quarter, and additional releases are planned for Japan and North America following Korea and Taiwan in the first half of next year. Additionally, the release schedule for Japan was postponed once to localize in-game elements. Since Lineage W maintains a revenue ranking within the top 10, it is estimated to record daily revenue of around 500 million KRW in its first quarter after release.

Umamusume was estimated to have daily revenue of 1 billion KRW in the third quarter; however, following operational issues, a decline in revenue ranking was observed, leading to a slight downward revision of the daily revenue estimate for the fourth quarter.

There are three anticipated mobile games scheduled for release at the end of this year or early next year, and Kakao Games holds approximately 20% equity in all the developers of these games. The major new global release planned for the fourth quarter is Eversoul. As a subculture genre game combined with dating simulation elements and a new intellectual property (IP), the daily revenue for the first quarter after release is estimated at 500 million KRW. It is scheduled for official release in Japan in the second quarter of next year.

The new title being developed by the subsidiary XL Games is currently undergoing extended balancing work, making its release in the fourth quarter of this year uncertain. Hana Securities assumes a release in early first quarter of next year, estimating initial daily revenue at 1.5 billion KRW. Another new title, Ares: Live of Guardians, is expected to be released at the end of the first quarter next year.