NH Investment & Securities on the 6th said NCSOFT has entered a recovery phase in earnings on the success of AION2 and Lineage Classic. It maintained a Buy rating and a target price of 330,000 won. NCSOFT's previous trading day closing price is 211,500 won.
An Jae-min, an analyst at NH Investment & Securities, said, "Following AION2, the company also made Lineage Classic a success, entering a meaningful phase of normalized earnings," adding, "In the second half, momentum for new releases will continue with AION2's global launch slated for the end of the third quarter and the 2027 release of 'Horizon: Steel Frontier.'"
For this year's results, it forecast revenue of 2.09 trillion won and operating profit of 387.1 billion won. These are increases of 38.8% and 2,304.3%, respectively, and are expected to make up for the continued operating slump since 2022.
In addition, of the 9.9% in treasury shares held, the remaining treasury shares excluding the 1% allocated for employee performance compensation are slated to be canceled. This is seen as positive in terms of enhancing shareholder value.
First-quarter results were also expected to be solid. NH Investment & Securities projected that NCSOFT will post first-quarter revenue of 522.2 billion won and operating profit of 111.2 billion won. These represent increases of 44.9% and 2,029.6%, respectively, from a year earlier, and it said operating profit is expected to significantly exceed the market consensus (average forecast) of 89.6 billion won.
An said, "Revenue from AION2 will be fully reflected over three months, and revenue from Lineage Classic, released in February, will also contribute significantly," adding, "AION2 was released to have recorded 68.2 billion won in revenue through Feb. 9, and first-quarter revenue is projected to come in at 131.7 billion won."
Lineage Classic recorded 50 billion won in revenue in February, and revenue through March is estimated at 78 billion won. However, due to the impact of deferred revenue recognition, the revenue actually recognized in the first quarter is expected to be 54.6 billion won.
An said, "Revenue is set to increase by around 118 billion won quarter over quarter, and we expect the company to achieve a three-digit operating profit for the first time in a while."