[Click eStock] "Krafton, Target Price Raised to 300,000 Won Despite Q1 Sales Decline"

On the 17th, SK Securities raised the target price of the game company 'Krafton' to 300,000 KRW. The steady traffic of the popular title Battlegrounds (PUBG), the effect of new releases, and strengthened shareholder return measures are expected to act as driving forces for the stock price increase.

Nam Hyoji, an analyst at SK Securities, stated in a report on the same day, "We estimate Krafton's first-quarter sales to be 535.7 billion KRW, down 0.6% from last year," adding, "This appears to be due to the inability to conduct marketing activities during the peak season because of Chinese game regulations, resulting in a decrease in royalty revenue from Tencent's Chinese version of PUBG, 'Hua Ping Jing Ying'."

Analyst Nam said, "Both PUBG PC and mobile maintain steady traffic, and the Indian version of Battlegrounds (BGMI) is strengthening marketing with local collaboration content to increase sales," and predicted, "New releases such as 'Dark and Darker Mobile' will also begin to be reflected in the performance."

Krafton plans to conduct a large-scale closed beta test (CBT) of 'Dark and Darker Mobile' from the 24th to the 28th and release it globally within the year. Due to the characteristics of the extraction role-playing game (RPG) genre, it is expected to structure its benchmark (BM) mainly around skin sales and pass products.

Analyst Nam said, "'Dark and Darker Mobile' is a newly challenged genre, so it will focus on expanding into a new genre and securing traffic rather than sales," and forecasted, "It will contribute significantly to sales starting next year when traffic stabilizes." He estimated the sales contribution of 'Dark and Darker Mobile' this year to be around 52.2 billion KRW. He also mentioned, "In the second half of the year, the release of 'Dinker Mobile' and early access for 'Black Budget' and 'inZOI' are planned."

He added, "Krafton's stock price has risen 31% due to strengthened shareholder returns, and with an additional 199.2 billion KRW worth of treasury stock acquisition and cancellation, the current stock price level can be supported," and stated, "Reflecting expectations for sales growth of PUBG and BGMI and new releases, we raise the target price to 300,000 KRW." He further noted, "There is still room for upward revision of estimates due to mergers and acquisitions (M&A), equity acquisition, and game IP publishing."