[Click eStock] "NCSoft, Game Revenue Declines Except Lineage M... Target Price Down"

Daishin Securities announced on the 11th that it is lowering the target price for NCSoft from the previous 520,000 KRW to 430,000 KRW.

NCSoft recorded sales of 478.8 billion KRW and operating profit of 81.6 billion KRW in the first quarter. Compared to the same period last year, these figures decreased by 39% and 67%, respectively, reflecting a poor performance. This decline in sales was due to the lack of content updates in most PC and mobile games except for Lineage M. In the case of Lineage M, sales increased by 15% quarter-on-quarter due to content updates.

However, NCSoft's operating profit exceeded market expectations, which appears to be due to a significant reduction in marketing expenses. NCSoft's marketing expenses in the first quarter were 4.9 billion KRW, down 88% compared to the same period last year.

Lee Ji-eun, a researcher at Daishin Securities, stated, "The strong performance this quarter accompanied by an abnormal reduction in marketing expenses and a rapid decline in game sales is unlikely to continue into the next quarter." She added, "From the next quarter, marketing expenses are expected to increase again due to content updates for existing games and pre-marketing activities related to new releases." She further commented, "NCSoft is expected to generate stock price momentum with new releases within the year," but also noted, "Due to valuation pressure from the continuous decline in sales of existing games and intensified competition among new massively multiplayer online role-playing games (MMORPGs), a trading strategy is recommended."