[Click eStock] "Webzen, Continued Earnings Surprise... Target Price Raised"

Shinhan Investment Corp. upgraded its investment opinion on the game company ‘Webzen’ from ‘Neutral’ to ‘Buy’ on the 14th and raised the target stock price to '25,000 KRW'. This is due to the stable growth in performance driven by the hit new game ‘MU Monarch’ and the company’s stable business strategy.

Kang Seok-oh, Senior Researcher at Shinhan Investment Corp., analyzed, "MU Monarch, released by Webzen in October last year, has maintained its position within the top 10 in Google Play’s revenue rankings," adding, "The global success of the game is leading to a revenue and operating profit surprise for Webzen."

Webzen recorded sales of 70.7 billion KRW in the fourth quarter of last year, a 75.1% increase compared to the previous quarter (third quarter). Operating profit reached 18.3 billion KRW, up 81.8% from the previous quarter. This figure far exceeded the operating profit consensus of 14.2 billion KRW.

The company’s strategy to expand external publishing was also positively evaluated. Senior Researcher Kang said, "Although Webzen failed to achieve hits with titles like ‘Ragnador’ and ‘I Want to Be the Dark Power,’ it clearly shows a strong will to procure externally developed games that fit current trends to expand its game lineup," adding, "This is an effective risk management strategy because losses other than marketing costs are limited when a game fails to succeed." He continued, "This is the best strategy that can be shown in the current situation where Webzen has sufficient funds to invest in external games and studios."

He forecasted, "With Webzen’s equity investment in ‘Hound13’ in January, the number of new games this year and next year will increase more than ever before," and "They will boost performance by servicing both in-house developed and external titles in appropriate proportions."

Furthermore, he noted, "Webzen has started to show shareholder return intentions such as dividends and share buybacks since last year," and predicted, "As a low PBR (Price-to-Book Ratio) and low PER (Price-to-Earnings Ratio) stock, it will create potential for stock price appreciation along with performance improvement."