Hanwha Investment & Securities on the 6th said DoubleU Games' results are likely to improve this year through profitability gains at subsidiaries and expense cuts. It maintained a Buy rating and a target price of 72,000 won. DoubleU Games' previous day's closing price was 49,250 won.
Hanwha Investment & Securities projected DoubleU Games' 2026 revenue and operating profit will each rise 10% to 797.9 billion won and 256.2 billion won. Profit growth is expected this year through subsidiaries' revenue increases and expense reductions.
Kim So-hye, an analyst at Hanwha Investment & Securities, said, "We expect profitability improvements at subsidiaries to determine the magnitude of the turnaround," adding, "While Supernation and Paxxie Games have marketing expense ratios of about 40% and 80% of revenue, respectively, if scale expands with the development of new AI-based services, we expect to see operating profit gains."
Expense cuts are also expected to have a positive impact on future results. The reduction in labor costs from internal workforce adjustments carried out from late last year to early this year is expected to be reflected from the first quarter.
The share of platform fees is also expected to decline. Kim noted, "As the DTC (direct-to-consumer) share expanded every quarter last year, the platform fee share has been falling, which is also a driver of profitability improvement," adding, "Given the high convenience of mobile-web play, which favors DTC shifts, the platform fee share versus revenue is expected to fall further."