[Click eStock] "Pearl Abyss, 'Red Desert' Launch Imminent... Gradual Buying Response Effective"

On the 17th, Hanwha Investment & Securities evaluated Pearl Abyss, stating that gradual buying responses are valid as the momentum for the release of 'Red Desert' in the second half of the year is expected. They maintained a 'Buy' investment rating while lowering the target price to 44,000 KRW from the previous level.

Researcher Kim So-hye of Hanwha Investment & Securities explained, "Despite recent derating of game stocks and overall market volatility, Pearl Abyss's stock price is bottoming out. The Black Desert IP sales have passed their low point, and from a supply-demand perspective, the situation is favorable, so the time when expectations for the release of Red Desert will intensify is near."

First-quarter earnings are expected to exceed market estimates, with sales of 85.7 billion KRW and operating profit of 700 million KRW, surpassing the operating profit consensus of -5.1 billion KRW. By IP, Black Desert sales are expected to decrease by 9% from the previous quarter to 65 billion KRW, and EVE sales are expected to decrease by 2% to 19.5 billion KRW. Researcher Kim said, "Despite concerns about declining sales, sales in the North American and European regions remain solid. Labor costs are also expected to decrease by 3% compared to the previous quarter, and marketing expenses are expected to decrease by 38% due to the absence of large-scale updates and limited costs for GDC (Game Developers Conference)."

In the second half of the year, marketing activities related to the release schedule of 'Red Desert' are expected to intensify. Researcher Kim stated, "The company's announced fourth-quarter release schedule remains unchanged, and the roadmap for nearly monthly game shows and events this year is proceeding smoothly. Starting with PAX East (USA) in May, B2C marketing targeting general users will confirm the possibility of the release."

She added, "Since expectations and disappointments about the release have been repeated over several years, the downside risk to the stock price is not significant."