[Click eStock] "NCSoft, Continued Passive Investment May Lead to Decline... Target Price Down"

On the 19th, Kiwoom Securities downgraded the target price of NCSoft from 240,000 KRW to 200,000 KRW, stating that "in order to create substantial changes in future-oriented businesses such as blockchain and consoles, it is necessary to strengthen capabilities in core tasks such as strategy and development." The investment opinion of outperform (exceeding market returns) was maintained. The closing price on the previous day was 168,800 KRW.

On the same day, Jin-gu Kim, a researcher at Kiwoom Securities, stated, "If the company continues its passive investment stance as before, it must realize that it could be left behind in the global market."

Researcher Kim predicted, "NCSoft's total sales for the first quarter will be 404.1 billion KRW, a 7.7% decrease compared to the previous quarter, but marketing expenses are expected to decrease by 69.9% to 12.1 billion KRW compared to the previous quarter. Accordingly, operating profit is expected to be 12.8 billion KRW, a decrease of 84.3% year-on-year but an increase of 232.6% quarter-on-quarter, resulting in an operating profit margin of 3.2%."

PC sales are expected to record 94.1 billion KRW, a 1.9% increase quarter-on-quarter, as the positive effect of Throne and Liberty (TL) offsets the natural decline effect of the existing lineup. Mobile game sales are expected to be 269.9 billion KRW, a 10.9% decrease quarter-on-quarter, due to the base effect following large-scale updates of Lineage 2M and Lineage W in the previous quarter.

Researcher Kim added, "Operating profit estimates for this year and next year have been adjusted downward by 25.6% compared to previous estimates. Considering the red oceanization of the MMORPG (Massively Multiplayer Online Role-Playing Game) market and aggressive new releases by competitors, we have lowered the existing mobile game sales projections."