[Click eStock] "Pearl Abyss, Uncertain Release Schedule for Red Desert... Conservative Approach Recommended"

Daishin Securities maintained a buy rating and a target price of 50,000 KRW for Pearl Abyss on the 12th, assuming the release schedule of the new title Red Desert in the first quarter of 2024 for earnings estimates, but noted uncertainty regarding the new release schedule.

Pearl Abyss recorded sales of 85.8 billion KRW in the first quarter of this year, down 6% year-on-year, and operating profit of 1.1 billion KRW, down 78%. Both sales and operating profit fell short of consensus estimates.

For Black Desert PC, which accounts for the largest share of Pearl Abyss's sales, despite a well-received update being implemented on domestic servers, sales declined by 8% quarter-on-quarter due to insufficient reflection days. From the second quarter, a slight sales rebound is expected due to the update implementation and regional expansion of the update.

Additionally, first-quarter marketing expenses recorded 5.6 billion KRW, down 31% year-on-year. This is attributed not only to the absence of new titles but also to the cost control trend in 2023.

Lee Ji-eun, a researcher at Daishin Securities, stated, "We assumed the release of Red Desert in the first half of 2024 and reflected an increase in marketing expenses from the second half of 2023 in our earnings estimates," adding, "Regarding the new title Red Desert, the company mentioned aiming to complete development in the second half of 2023 and is currently in discussions with global partners."

She further explained, "Since negotiations with partners have not been progressing rapidly, there is a possibility of further delays in the release schedule," and added, "Given the continued downward trend in sales of the existing Black Desert and the uncertainty of the new title's release schedule, a conservative approach is necessary until the release schedule becomes clearer."