[Click eStock] "Krafton, Positive Outlook on New Releases and Shareholder Return Policy... Target Price Up"

Shinhan Investment Corp. analyzed on the 12th that Krafton’s new game expectations and large-scale shareholder return policies will have a positive impact on its stock price. The investment opinion was maintained as 'Buy,' and the target price was raised to 260,000 KRW.

Shinhan Investment Corp. forecasted that Krafton’s operating revenue and operating profit for the first quarter will reach 562.4 billion KRW and 226.8 billion KRW, respectively. Researcher Kang Seok-oh of Shinhan Investment Corp. said, "Operating profit is expected to fall short of the consensus of 53.3 billion KRW," adding, "Sales in China are showing a natural decline."

He explained, "Krafton plans to release 'Dark and Darker Mobile,' which was showcased at last year’s G-Star, within this year," and added, "Following the PC test of Dark and Darker, global recognition and exposure of the extraction RPG genre have increased, which is expected to be advantageous for initial marketing."

He emphasized, "Since Krafton holds the intellectual property (IP) PUBG, it is difficult to expect similar financial contributions from new titles," but added, "It seems they will first secure traffic with popular content and then apply the business model (BM) refinement honed through PUBG."

He predicted, "In the year when new IPs are released, the scale of sales from new titles will be less influential on the initial stock price than whether they can generate large-scale global traffic," and continued, "Considering their excellent operational capabilities, investing heavily in marketing for the blossoming extraction RPG market to firmly attract initial users is expected to be advantageous in the mid to long term."

He explained, "They are maintaining solid performance through BM refinement, and with new titles that have the potential to become new cash cows being released from this year through next year, expectations for the stock price are also reflected," adding, "The approximately 200 billion KRW scale of share buybacks conducted in a short period is positive in that it secures stock price stability through shareholder return policies amid increased market volatility."