Daishin Securities Co. said on the 6th that a turnaround in Kakao Games' results will be difficult through next year. It kept its investment opinion at "Marketperform" and its target price at 13,000 won. Kakao Games' closing price the previous day was 16,600 won.
Kakao Games posted revenue of 127.5 billion won and an operating loss of 5.4 billion won in the third quarter of this year (July–September). Revenue fell 21.7% from a year earlier, and operating profit swung to a loss from the same period a year ago.
Lee Ji-eun, a researcher at Daishin Securities Co., said, "In June, even though the 4th-anniversary update of 'Odin: Valhalla Rising' lifted mobile revenue, revenue declines continued for titles other than Odin."
She added, "On PC, revenue grew sharply from the previous quarter thanks to the collaboration update effect of 'Battlegrounds,'" but noted, "For both mobile and PC, the update effects will fade in the fourth quarter, leading to a revenue decline."
The researcher saw it as difficult for results to rebound through the first quarter of next year. Although it is selling noncore assets such as Kakao VX to focus on the game business, the overall business environment is expected to be unfavorable.
The researcher said, "Revenue declines for existing titles are continuing, and although new games are being released one after another, their performance has been weak," adding, "With the next title's launch also delayed, a meaningful turnaround through the first half of next year will be difficult."
Meanwhile, Kakao Games plans to release a total of nine new titles next year. The researcher said, "Most of the upcoming new titles are in the massively multiplayer online role-playing game (MMORPG) genre, where competition is intensifying," and assessed, "It will be difficult for expectations to be priced into the stock ahead of the new releases."