[Click eStock] "Neowiz, Short-Term Momentum Lacking... Investment Rating and Target Price Lowered"

Investment Rating Downgraded from 'Buy' to 'Neutral'
Target Price Lowered from 28,000 Won to 23,000 Won

NH Investment & Securities on the 23rd downgraded its investment opinion on Neowiz from 'Buy' to 'Hold' and lowered the target price from 28,000 KRW to 23,000 KRW, citing a lack of short-term momentum.

Ahn Jae-min, a researcher at NH Investment & Securities, explained, "While the shift in development strategy to focus on consoles following the success of 'P-ui Geojit' is positive, there is still some time left before the release of games that can significantly contribute to earnings growth, resulting in a lack of short-term momentum."

He noted that the suspension of game projects utilizing Japanese intellectual property (IP) originally planned has led to a lineup reorganization, and as a result, there are no large-scale new releases expected in the near term, which is disappointing. Ahn said, "Momentum and earnings growth may appear around the release of the downloadable content (DLC) for P-ui Geojit, expected in the first half of 2025. The two new titles?a 'life simulation' and a 'survival action-adventure'?being prepared by Round8 Studio, which developed P-ui Geojit, along with the game release from Polish developer Blank Studio, in which we invested last year, will be key turning points for the stock price."

Neowiz's third-quarter performance this year is expected to be solid. Ahn forecasted, "Neowiz's third-quarter revenue is expected to increase by 3.4% quarter-on-quarter to 89.9 billion KRW, and operating profit is projected to rise by 29.1% to 6.1 billion KRW, surpassing the market consensus (average securities firm forecast) of 4.6 billion KRW. The revenue boost from the first anniversary update of 'Brown Dust 2' conducted in June will continue through the third quarter, and sales from the August release of 'The Legend of Heroes: Gagharv Trilogy' will also be partially reflected." He added, "However, marketing expenses related to new releases are expected to increase."