[Click e-Stock] "DoubleU Games: Can It Achieve Both Performance Improvement and Enhanced Shareholder Returns?"

On January 23, Daishin Securities stated that the revenue base of DoubleU Games’ subsidiaries, which had been a factor in last year’s weak performance, has now expanded sufficiently, making it possible for the company to achieve both top-line growth and profit contribution this year. The investment opinion remains "Buy," with a target price of 70,000 won.

DoubleU Games’ revenue for the fourth quarter of last year is expected to reach 194 billion won (up 24.5% year-on-year), with operating profit at 62.1 billion won (up 2.6%), both figures expected to meet market expectations.

Lee Jieun, a researcher at Daishin Securities, commented, "Due to the slowdown in the growth of the social casino genre (DUC, DDC, WOW Games), which accounts for about 80% of total revenue, the company’s overall revenue will see only a slight increase compared to the previous quarter. Although marketing expenses are expected to continue rising in the fourth quarter, rapid revenue growth from new genres based on these investments, along with a reduction in platform costs, will keep the operating profit margin (OPM) at around 32%, similar to the previous quarter."

For this year, operating profit is expected to grow by at least 19.8%. This is because the growth of the iGaming and casual genres is anticipated to reduce the company’s reliance on the recently underperforming social casino genre.

Lee further analyzed, "In particular, Paxie Games, a casual genre developer, is accelerating the launch of new titles utilizing artificial intelligence (AI), which increases the visibility of future growth. There is also potential to revise up future operating profit estimates due to factors such as reduced labor costs from improved management efficiency."

Alongside improved performance, the company is also expected to strengthen its shareholder return policy. Lee noted, "As the dividend size has been increasing every year, there is a possibility of a reduced dividend from the 2025 year-end payout. Currently, the stock is trading at about six times the 12-month forward price-to-earnings ratio (PER) based on our estimates, meaning valuation pressure is also low."