NH Investment & Securities on the 30th said NCSOFT is entering a phase where new-release momentum is fading. However, it noted that the introduction of a proprietary payment system for the PC version is reducing fees, so it is necessary to approach the stock based on earnings fundamentals. It maintained a Buy rating and lowered the target price to 300,000 won from 320,000 won. NCSOFT's previous closing price was 201,500 won.
NH Investment & Securities projected that NCSOFT will enter an earnings normalization phase in 2026. It said revenue from the new title "AION2" is holding steady, and the fee savings from the proprietary payment system adopted for existing games starting in Nov. have been reflected.
Ahn Jae-min, an analyst at NH Investment & Securities, said, "The PC payment share exceeds 80% for the new AION2, while we estimate it is still below 50% for existing games," adding, "However, as rewards are offered for PC payments, the share of PC payments among hardcore users is expected to gradually increase."
Accordingly, it added that the fee savings effect was reflected at 110 billion won. However, it explained that the target price was lowered because earnings estimates after 2026 were revised downward.
Ahn projected NCSOFT's fourth-quarter results at 392 billion won in revenue and 2.5 billion won in operating profit. While the company is expected to return to an operating profit, it will likely miss the market consensus of 26.4 billion won.
However, it projected that full-fledged earnings normalization will begin in the first quarter. Ahn said, "Even with AION2 revenue recognized, some revenue will be booked in Jan. due to the deferral of membership-related revenue, and marketing expenses increased significantly due to the new release and participation in G-Star," adding, "Labor costs are also expected to rise as incentive expenses tied to the successful launch of AION2 are reflected."