[Click eStock] "Krafton, Strong 3Q Earnings Expected... Stock Price Recovery Anticipated"

Hyundai Motor Securities on the 14th issued a 'Buy' rating and set a target price of 250,000 KRW for Krafton, anticipating strong performance in the third quarter of this year and a recovery in its stock price.

Hyun-yong Kim, a researcher at Hyundai Motor Securities, stated, "Krafton's third-quarter sales are expected to be 433.4 billion KRW, a 0.1% decrease compared to the same period last year, while operating profit is projected to increase by 11.1% to 160.6 billion KRW, marking a shift from the profit decline trend in the first half to positive profit growth."

Sales in the PC segment are expected to grow by 3.6% year-on-year due to the expansion of the supercar collaboration despite a low base effect, and although mobile sales in China remain a variable, growth is anticipated in other regions. Operating expenses are expected to increase by about 10 billion KRW year-on-year due to higher labor costs and commission fees, but this will be offset by decreases in marketing and stock compensation expenses, resulting in an overall 5.6% reduction.

Although the Chinese market is contracting, signs of gradual improvement are emerging. Researcher Kim explained, "It is true that the entire market in China has contracted due to reopening (resumption of economic activities), but in July, there was a significant increase in traffic compared to the previous month. While sales are still down compared to the same month last year, the rate of decline has significantly narrowed compared to the first half of this year (estimated at 25-30%), which is positive."

New game releases are also a factor to look forward to. Researcher Kim said, "Despite the sluggish game industry, Krafton is generating an annual operating profit of 700 billion KRW, which is overwhelmingly higher than its competitors. Concerns about the absence of new releases will be limited as 'Black Budget' and 'Subnautica' are scheduled for release in the second half of next year. Black Budget is set to enter a closed test within this year, accelerating preparations for its launch."