NH Investment & Securities noted on the 22nd that although the large one-time expenses from last year related to the Timon and Wemaep incidents have been resolved, significant stock price increases would require successful performance from new releases. They raised their target price from the previous 18,000 won to 22,000 won while maintaining a 'neutral' investment opinion. The closing price of NHN on the previous trading day was 21,350 won.
NH Investment & Securities expects NHN to record revenues and operating income of 660.1 billion won and 27.8 billion won, respectively, increases of 9.2% and 2% compared to the previous year in the first quarter of this year. The operating income is projected to meet the market consensus of 26.3 billion won.
Analyst Ahn Jae-min from NH Investment & Securities explained, "Game revenue is inevitably declining with the fading effect of last year's 10th anniversary event of Disney Tsum Tsum, but web board games are still steadily serving as a cash cow."
The technology businesses of NHN Cloud and Techrolus, which are showing steady growth, are expected to maintain the highest growth rate among their main businesses this year. Marketing expenses are expected to stabilize at 17.5 billion won, a 2.6% increase from the previous year, but they are projected to rise once marketing related to Darkest Days begins in the second quarter.
Last year, related to the Timon and Wemaep insolvency issues, 140.7 billion won of bad debt expense was recognized, revealing poor performance and uncertainty regarding the Payco business. The related uncertainties have largely been alleviated.
Analyst Ahn noted, "In the current situation where the Payco business can only be downsized, NHN's persistent issue of underperformance in the gaming sector needs to be resolved," adding, "Related expectations are anticipated to form once new release performances appear."
He continued, "Starting with Darkest Days (shooting RPG) on the 24th, Abyss Dia (subculture collectible RPG), Project STAR, Project MM, and EMMA are preparing for release within the year."