[Click eStock] "KakaoGames Seeks Rebound After Second Half"

NH Investment & Securities downgraded its investment opinion on Kakao Games from Buy to Hold on the 8th, and also lowered the target price from 21,000 KRW to 15,000 KRW. The analysis suggests that a meaningful recovery in earnings and a stock price rebound will only be possible if the new releases scheduled for the second half of this year succeed.

On the same day, Jaemin Ahn, a researcher at NH Investment & Securities, stated, "Kakao Games' first-quarter earnings are expected to show sales of 121.5 billion KRW (a 31.9% decrease year-on-year, and an 8.8% decrease quarter-on-quarter) and an operating loss of 5.3 billion KRW (turning to a loss)."

Researcher Ahn explained, "The downward revision in this earnings estimate is significant compared to NH Investment & Securities' previous forecast. This is because Kakao Games reclassified the business of Senatechnology and Kakao VX as discontinued operations at the end of last year, and removed the related business sales that had been included in this year's estimates."

He added, "While the company plans to focus on its core gaming business by restructuring non-core subsidiaries, the pressure on the performance of new releases will increase accordingly. We expect earnings recovery to come after the performance of games released from the third quarter onward."

Among major games, older titles such as ArcheAge War and Uma Musume have shown a decline in sales. The scheduled new lineup includes Gadis Order (Action RPG) and Project C (Subculture) in the third quarter of this year, Project Q (MMORPG) and Chrono Odyssey (Online Action RPG) in the fourth quarter, and ArcheAge Chronicle (Online Action RPG) in the first half of next year.

Kakao Games' earnings for this year are forecasted at sales of 531 billion KRW (a 15.3% decrease year-on-year) and operating profit of 2.9 billion KRW (an 85.0% decrease year-on-year). Researcher Ahn added, "An operating loss is inevitable until the first half of the year. After the performance of the upcoming game releases, a meaningful rebound in operating profit will come after next year."

This content was produced with the assistance of AI translation services.