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[Alpha Biz= Reporter Kim Sangjin] Hanwha Investment & Securities has reiterated its "Buy" rating on NCSoft, raising the target price from 220,000 KRW to 280,000 KRW. While NCSoft’s Q3 earnings may fall short of market expectations, Hanwha analysts believe that all negative factors have already been priced into the stock, setting the stage for maximized operational leverage.
Hanwha Investment estimates NCSoft's Q3 earnings with revenue of 401.9 billion KRW and operating profit of 2.7 billion KRW, below the consensus of 8.5 billion KRW. Although the company launched a new title, the release did not significantly impact earnings. Revenue from key mobile games, however, is expected to have risen 9.4% from the previous quarter due to the effects of Lineage M Reboot World.
The brokerage also acknowledged that in a stagnant market, achieving a high hit ratio for new games is challenging. With six new releases planned by the end of 2025, including Journey of Monarch, Hanwha sees NCSoft’s stock price and earnings base as likely to rise from their current lows. The company is also exploring diversified game genres, intellectual property (IP), and target user bases for its upcoming titles.
Additionally, Hanwha noted that some of the factors that contributed to NCSoft's stock devaluation may now be easing. The current share price has returned to levels seen before the launch of Lineage M, its first mobile game. With a conservative estimated asset value of 3 trillion KRW, the firm views this price as an attractive entry point.
In conclusion, Hanwha emphasized that, while the gaming industry remains highly competitive and volatile, NCSoft is positioned to maximize operational leverage. The brokerage highlighted NCSoft’s efforts to revamp management and streamline fixed costs, signaling potential long-term growth as negative factors have already been factored into the stock.
Alphabiz Reporter Kim SangJin(letyou@alphabiz.co.kr)
