[Click e-Stock] "Netmarble Has Highest Chance of Hit New Releases... Target Price Up"

On October 21, Shinhan Investment Corp. raised its target price for Netmarble to 91,000 won, citing the highest probability of earnings growth and blockbuster new releases among game companies for next year.

Shinhan Investment Corp. predicted that Netmarble would post sales of 696.2 billion won and operating profit of 88.9 billion won in the third quarter, exceeding market expectations. This represents a 7.6% increase in sales and a 35.8% increase in operating profit compared to the same period last year.

Kang Seokoh, a researcher at Shinhan Investment Corp., explained, "'Vampire' in August, 'King of Fighters AFK' and 'Seven Knights Rebirth Global' in September delivered results that far exceeded expectations. Labor and marketing costs have been kept under 30% and 20% of sales, respectively, and the company continues to pursue business with profitability in mind."

Netmarble plans to launch 'Monster Arena: Star Dive' and 'Solo Leveling: Overdrive' in the fourth quarter, with estimated quarterly sales of 44 billion won and 28 billion won, respectively. 'The Seven Deadly Sins: Origin' is confirmed for release on January 28 next year. Both 'Monster Arena: Star Dive' and 'The Seven Deadly Sins: Origin' were promoted globally through TGS.

Researcher Kang stated, "'Monster Arena: Star Dive' and 'Solo Leveling: Overdrive' will demonstrate the company's multi-platform capabilities by expanding the user base to PC and console. Next year, the company will continue to build its portfolio with more than five new titles and the overseas expansion of existing games."

Researcher Kang maintained a 'Buy' rating and raised the target price to 91,000 won. The target price is based on 12-month forward earnings per share and a target price-to-earnings ratio of 20 times.

Kang commented, "The earnings surprise that began in 2024 is likely to continue into the second half of this year and next year. Considering the expected earnings growth for next year, Netmarble is judged to be the game company with the most attractive valuation in the sector."