[Click eStock] "NCSoft, Q2 Operating Loss Inevitable... Target Price Down"

Target Price Adjusted Down from 240,000 Won to 220,000 Won

Hanwha Investment & Securities on the 2nd lowered the target price for NCSoft from 240,000 KRW to 220,000 KRW, anticipating an operating loss in the second quarter of this year. The investment rating was maintained as 'Buy.'

So-hye Kim, a researcher at Hanwha Investment & Securities, stated, "Reflecting the decline in mobile sales and the increase in costs, we have revised down the expected operating profits for 2024 and 2025 by 22% and 6%, respectively, compared to previous estimates. Although the current stock price already reflects all negative sentiments, including concerns about earnings, only significant sales growth through the success of new releases will signal a reversal in the stock price trend."

NCSoft's second-quarter performance is expected to record an operating loss, falling short of market expectations. Researcher Kim said, "We estimate NCSoft's second-quarter results to show sales of 382.2 billion KRW and an operating loss of 7.2 billion KRW, missing the operating profit consensus (average securities firm forecast) of 8.6 billion KRW. As expenses related to new releases increase, the decline in existing game sales will not offset these costs, making a quarterly operating loss inevitable." She added, "PC lineup sales are expected to be similar to the previous quarter, but mobile sales excluding 'Lineage M' are understood to have significantly decreased compared to the previous quarter. Sales of 'Lineage 2M' and 'Lineage W,' which had no major updates, are estimated to have declined by 14% and 13%, respectively, compared to the previous quarter."

Although many new releases are expected in the second half of the year, expectations remain low. Researcher Kim forecasted, "Starting with 'Battlecrush' last week, several new titles including 'Hoyeon,' the 'Guild Wars 2' expansion pack, 'TL Global,' 'Blade & Soul 2' in China, and the 'Lineage IP' are scheduled for the second half of the year. However, expectations for these new releases are relatively low, and only if performance exceeds a certain level will it act as a momentum."