Have Hopes for New Releases Cooled? Netmarble Corporation’s Target Price Cut 8%

[Financial News] Mirae Asset Securities cut its target price for Netmarble Corporation by 8%, from 50,000 won to 46,000 won, forecasting that the lack of catalysts for share-price gains will persist as the release schedule for the company’s new games becomes uncertain. While cost savings and improved profitability from adopting artificial intelligence (AI) are expected, the analysis is that there will be few factors to drive a share-price rebound until the release of major new games takes shape. The firm maintained its ‘Buy’ rating.
Mirae Asset Securities analyst Im Hee-seok said on the 22nd, “The time has come to announce the lineup of new games after 2027,” and assessed that “the period without catalysts for share-price gains is expected to lengthen until the release of a major anticipated title comes into view.”
Mirae Asset Securities forecast Netmarble Corporation’s revenue this year at 2.892 trillion won and operating profit at 265 billion won. It expects revenue to rise 2% year on year, while operating profit will fall 24.8%. Next year, revenue and operating profit are projected to decline by 8.5% and 11.1%, respectively, to 2.645 trillion won and 236 billion won.
Profitability is expected to weaken as soon as the third quarter. Revenue is forecast at 765 billion won, up 9.9% from the same period last year, while operating profit is expected to fall 20.8% to 72 billion won. Fourth-quarter operating profit is also estimated to decline 46.1% year on year to 60 billion won.
Uncertainty over the release schedule for new games is weighing on the share price. ‘Solo Leveling: KARMA’ and ‘Shangri-La Frontier: The Seven Strongest Species’ are among the titles set to launch soon, but concrete release schedules have not been confirmed for next year’s anticipated games ‘Pearl in Blue’ and ‘EvilBane.’
Analyst Im said, “‘Pearl in Blue’ previously raised expectations by presenting a playable version at the Tokyo Game Show,” but added, “The period without catalysts for share-price gains will continue until the release of a major anticipated title comes into view.”
However, the potential for improved profitability from AI adoption was viewed positively. After setting up an AI Strategy Office last year, Netmarble Corporation introduced a system this year under which all employees use AI agents. The analysis is that expanded AI use in game production, user analysis, and advertising operations is expected to reduce development and marketing costs.
Particular attention was paid to the potential for improved profitability in the casual games segment. As of the second quarter of this year, casual games accounted for 35% of Netmarble Corporation’s revenue, and the impact of improved advertising efficiency on earnings is expected to be significant. The company is also pursuing expansion into new genres, with SpinX at the center.
Analyst Im forecast that “AI-driven improvements in advertising efficiency and portfolio expansion will contribute to earnings growth,” adding, “Productivity gains and cost savings from a company-wide AI transformation will lead to improved profitability.”
[email protected] Bae Han-geul Reporter