[Click eStock] "Krafton, Battlegrounds Sales Recovery Is Key"

Samsung Securities Report

[Asia Economy Reporter Minji Lee] Samsung Securities maintained a neutral investment opinion on Krafton on the 9th and raised the target stock price by 12.5% from the previous level to 180,000 KRW.

The company announced that its operating profit for the fourth quarter was 126.2 billion KRW. This significantly exceeded market expectations due to a one-time accounting adjustment that reduced labor costs by 53 billion KRW compared to the previous quarter. Total sales increased by 9.2% quarter-on-quarter, meeting market expectations, despite a seasonal decline in Battlegrounds sales, thanks to the launch effect of the new Callisto Protocol. Although Callisto Protocol sales were not disclosed, they are estimated to be around 7.8 billion KRW.

The company stated that it will expand external game publishing to alleviate concerns about a gap in new releases this year. In addition to the previously announced Defense Derby, it plans to release a total of seven new titles this year, including five self-developed games and one publishing game. Samsung Securities analyst Donghwan Oh explained, “Since highly anticipated titles like Black Budget and Subnautica 2 are scheduled for release in the second half of next year, additional publishing contract announcements are necessary to ease concerns about the gap in new releases.”

The key issue is whether Battlegrounds sales will recover. While PC Battlegrounds sales have expanded since becoming free-to-play, mobile Battlegrounds continue to be affected by the ongoing contraction of the global gaming market. Quarterly sales are expected to rebound in the first quarter due to the Chinese Lunar New Year peak season effect, but year-on-year growth is unlikely. Analyst Donghwan Oh said, “Since the effect of new releases is limited, a rebound in the global mobile game market size and a recovery in Battlegrounds sales through content updates are essential for operating profit growth.”