[Click eStock] "Krafton Has Much to Prove, Target Price Lowered to 300,000 Won"

On January 12, Meritz Securities lowered its target price for Krafton to 300,000 won. The firm cited reduced investment appeal due to a higher cost structure and the dilution of core business value resulting from the acquisition of non-gaming companies.

Lee Hyojin, a researcher at Meritz Securities, stated, "In the fourth quarter, Krafton's consolidated revenue and operating profit are expected to be similar to those of the third quarter, with the PC segment maintaining solid growth, but mobile performance remaining weak." "Annual revenue is estimated at 1 trillion won and operating profit at 110 billion won, indicating a lack of growth potential," she explained.

Lee further analyzed, "Krafton has acquired several game companies over the past five years, starting with Unknown Worlds, but has failed to demonstrate tangible results. This is why impairment losses on goodwill have been recorded every quarter."

She continued, "Recently, the scope of acquisitions has expanded to include non-gaming companies, with 800 billion won invested in 2025 alone. Non-gaming companies pose two problems."

She explained, "Raising the revenue base increases the burden of growth after 2027 and leads to a decline in valuation. As PUBG enters a period of stagnating growth, the rapid expansion of non-gaming businesses makes even potential investors in the gaming industry hesitant."

Regarding the downward revision of the target price, Lee cited, "The growth burden of PUBG, the higher cost structure, and the dilution of core business value from non-gaming companies all reduce investment appeal. There is little incentive for a relative advantage until the release date of a new title that could captivate the market is announced."

However, she maintained a "Buy" rating, judging that the price-to-earnings ratio for 2026 has fallen to 12 times, and that the potential for further decline is limited as the timing for share buybacks approaches.