[Click eStock] "Mgame, Significantly Undervalued Phase... Steady Existing Games with New Release Momentum"

Kiwoom Securities analyzed on the 4th that Mgame is experiencing steady growth in its existing games while also gaining momentum from new releases. No investment opinion or target price was provided.

Oh Hyunjin, a researcher at Kiwoom Securities, stated, "Mgame is a first-generation online game specialist company with an online game lineup that has been established for over 20 years. The main lineups generating over 30 billion KRW in revenue last year are long-running games such as ‘Yeolhyeol Gangho Online’ and ‘Knight Online,’ with recent increases in overseas sales driving performance growth."

He added, "‘Yeolhyeol Gangho Online’ has shown clear growth in China since the siege warfare update in 2019, and ‘Knight Online’ has maintained strong growth centered in North America and Europe after opening new servers."

Kiwoom Securities evaluated that new game momentum is beginning in earnest for Mgame. He explained, "We are paying attention to the new release momentum through ‘GwihonM,’ which recently started pre-registration. It is a mobile game developed based on Mgame’s representative MMORPG ‘Gwihon’ IP, and user inflow is expected due to high IP recognition. Enhancements in gameplay such as fast leveling and design optimization are also expected to increase the likelihood of the new release’s success."

He also said, "The domestic publishing service for the mobile game ‘Jeonmin Gangho,’ based on ‘Yeolhyeol Gangho Online,’ is scheduled to be released within the second half of the year. Mgame is expected to expand its publishing game lineup annually in the future."

Kiwoom Securities projected Mgame’s expected sales and operating profit for this year at 84.5 billion KRW and 20.5 billion KRW, respectively. Sales are expected to increase by 3% year-on-year, but operating profit is expected to decrease by 4%.

He noted, "Although one-time costs were reflected in the second quarter, the performance momentum in the second half remains valid due to sales growth of ‘Yeolhyeol Gangho Online’ during China’s seasonal peak. The new release ‘GwihonM’ is an in-house developed game, and its profit contribution is expected to increase based on its performance, with full reflection in 2025 results."

He emphasized that the stock is particularly attractive from a valuation perspective. Researcher Oh explained, "The current stock price is at a significantly undervalued level with a price-to-earnings ratio (PER) of 5.3 times based on 2024."