[Click eStock] "Krafton, Continuous Growth with New Titles and PUBG IP... Target Price Maintained"

Operating Profit Forecast to Rise 63% in 2024 Q4
New Title 'inZOI' Launches March 28... Collaboration with NVIDIA
Sustained Growth Expected in the Global Gaming Market

Heungkuk Securities maintained a 'Buy' rating and a target price of 430,000 KRW for Krafton on the 16th. They forecast that traffic will be sustained through the robustness of the PUBG intellectual property (IP) and the continuous discovery of new content.

According to Heungkuk Securities, Krafton's sales for the fourth quarter of 2024 are expected to reach 700.8 billion KRW, with an operating profit of 267.2 billion KRW, representing increases of 60% and 63% year-on-year, respectively. In the PC segment, the ‘Black Market’ update and the sale of growth-type weapon skins drove performance, while in the mobile segment, the collaboration with McLaren vehicle skins received positive responses, contributing to an increase in average revenue per paying user (ARPPU). However, adjustments in promotions in the Chinese market and increased costs due to participation in global events partially affected profit margins.

Krafton's new title, 'inZOI,' is confirmed for Steam Early Access release on March 28. Krafton plans to focus its artificial intelligence (AI) technology to implement CPC (Co-Playable Character), providing immersive gameplay with enhanced player interaction. Based on approximately 100 billion KRW in AI investment and collaboration with NVIDIA, they aim to introduce a differentiated life simulation genre.

The sustained traffic and revenue stability of the PUBG IP, the introduction of user-generated content (UGC), and the release of AI technology-based new titles are expected to be growth momentum. Ji-hyun Kim, a researcher at Heungkuk Securities, stated, "However, the success of new IPs and some cost issues remain challenges," adding, "Krafton is expected to continue sustainable growth in the global gaming market through the success of new titles and AI-integrated technology."