DAISHIN SECURITIES noted that Kakao Games recorded poor results in the first quarter (January to March) while expectations for new releases are also low. It maintained its investment opinion of 'Marketperform.' Marketperform typically means that the stock price of a particular item is expected to fluctuate within -10% to 10% compared to the KOSPI index over the next six months.
DAISHIN SECURITIES also adjusted its target price down to 13,000 won, a 23.5% decrease from the previous 17,000 won. Kakao Games' closing price the day before was 14,360 won.
Kakao Games announced on the 7th that it recorded consolidated revenue of 122.9 billion won and an operating loss of 12.4 billion won in the first quarter of this year. Revenue decreased by 31% compared to the same period last year, and it turned into a deficit compared to last year's operating profit of 14.3 billion won.
Lee Ji-eun, a researcher at DAISHIN SECURITIES, said, 'In the first quarter, both the existing lineup and new releases showed poor performance, recording results below market expectations,' adding that 'although anticipated titles are expected to be released sequentially from the second half, expectations are low.'
This researcher expressed concerns, stating, 'While it is expected that the new release effect will reflect positively in next year's turnaround (earnings rebound), the valuation reflecting the performance of new releases is also at a burdensome level.'
The researcher believes that a conservative approach is necessary until new release performances become visible. He mentioned, 'The decreased hit ratio of new releases suggests that the momentum for their launch will also be limited,' adding, 'For the stock price to rebound, performance from new releases that exceeds market expectations must be visible.'