Daishin Securities evaluated that Netmarble's mobile new releases in the second half of last year had poor box office performance, noting that the fourth-quarter results are expected to fall short of market consensus (market estimate average). They maintained their investment opinion of 'market perform' and a target stock price of 200,000 won. Netmarble's closing price on the previous trading day was 189,000 won.
Daishin Securities estimated that the revenue for the fourth quarter decreased by 1% year-on-year to approximately 434.5 billion won. They forecast an operating loss of 103.1 billion won, marking a return to loss compared to the same period last year. The revenue aligns with the consensus, but the expected operating loss falls short of the consensus estimates.
Lee Ji-eun, a Research Institute analyst at Daishin Securities, noted, “In the fourth quarter, there were two new releases, with the official launch of TL and the launch of Journey of Monarch.” Lee added that, “In the case of TL, it showed box office performance exceeding expectations in the first two months post-launch, but despite the largest-scale update since the release in December, the revenue ranking has continued to decline.” It was also assessed that another new release, Journey of Monarch, which recorded over 8 million pre-registrations before launch, had high pre-expectations but recorded poor box office performance.
The analyst estimated that the revenue from existing Netmarble games, Lineage M and Lineage 2M, fell by 18% and 12%, respectively, compared to the previous quarter. The expenses are estimated at 319.4 billion won for labor costs and 49.1 billion won for marketing costs, with the increase in labor costs attributed to one-time severance payments following large-scale workforce reductions.
This analyst predicted that Netmarble would show an upward trend in the first half and lower performance in the second half this year. The analyst noted, “Due to the poor box office performance of the two mobile new releases directly published in the second half of last year, it will be difficult for top-line growth in the first half of this year,” adding, “The expected timeline for major new releases includes Taektan (RTS) at the end of the second quarter, new genres of existing intellectual property (IP), and Aion 2 and LLL in the fourth quarter. There will be a lack of both performance and new release momentum leading up to Taektan's launch.”