[Click eStock] "Kakao Games, Target Price Lowered to 18,000 Won"

On the 16th, SK Securities lowered the target price of Kakao Games to 18,000 KRW while maintaining a neutral investment rating.

Nam Hyoji, a researcher at SK Securities, evaluated that "there is a need to focus on the gaming business to strengthen the fundamentals." In the third quarter, sales reached 187.7 billion KRW, and operating profit was 1.3 billion KRW. Net income attributable to controlling shareholders was 42.1 billion KRW, and operating profit was estimated to have fallen short of consensus. Core gaming sales amounted to 152.2 billion KRW; despite the Odin update and the global release of ArcheAge War, sales were expected to be similar to the previous quarter due to a decline in existing game sales. The 37.5% stake in Senatechnology was sold and reflected as discontinued operations from the third quarter, making direct comparison of other sales with the previous quarter difficult. Non-operating income includes approximately 78.5 billion KRW from the sale of Senatechnology.

Recently, the Kakao Group as a whole has been focusing on core business capabilities and restructuring businesses with low synergy to the main business. Kakao Games reduced its stake in Senatechnology, and Kakao VX decided to withdraw from Kakao Friends Golf, healthcare platform business, and NFT business. VX plans to manage profitability by retaining only the reservation platform with high growth potential and screen-related businesses.

In the fourth quarter, releases of 'POE2', 'Lost Idols: Witch of Hypocrisy', and 'Valhalla Survival' are planned. The known lineup for next year includes four PC console titles and four mobile titles waiting in the pipeline, but considering the continuously declining hit rate recently, it is difficult to positively evaluate the new releases scheduled for 2025. Researcher Nam said, "It seems unlikely to escape the current sluggish performance trend until the release of the highly anticipated 'Chrono Odyssey'." He added, "We adjusted the target price to 18,000 KRW following the downward revision of next year's estimates. It is necessary to concentrate company-wide resources on the gaming business to strengthen the core business and highlight Kakao Games' strengths." He also said, "We can expect a re-evaluation of the gaming business when information about next year's lineup becomes more concrete."