Netmarble
The author is an analyst of NH Investment & Securities. He can be reached at jaemin.ahn@nhqv.com -- Ed.
Last year, Netmarble recorded both operating losses and net losses due to: 1) a lack of new game releases; 2) new title failures; and 3) a worsening financial structure following the acquisition of SpinX Games. In 2023, however, a recovery is expected on the launch of a robust new lineup.
New game momentum expected
Maintaining a Buy rating, we raise our TP on Netmarble from W75,000 to W81,000. Reflecting a decrease in momentum following the launch of Meta World: My City on Apr 19, Netmarble shares have pulled back in recent days. However, initial download rankings for the title (based on Apple’s App Store; Taiwan: 1st, Thailand: 1st) are solid, and its quality and play appeal are strong. In line, we expect the game to succeed in the global casual game market.
Featuring in-game real estate transactions, Meta World: My City is expected to get the ball rolling for the metaverse game format. In addition, the game’s high download rankings should translate into solid sales, as the fresh P2E offering is linked to Netmarble’s Marblex (MBX) cryptocurrency.
Moving ahead, expectations should begin building for the release of new games, including Grand Cross W and Tower of God: New World in 2Q23, games which have received publishing rights in China (A3: Still Alive, Shop Titans, StoneAge) over July~August, and Arthdal Chronicles and Solo Leveling: ARISE in 2H23.
Turnaround anticipated from 3Q23
We forecast a turn to profit from 3Q23 if new titles released during 2Q23 show results. Although its P/E multiples are lofty due to operating losses at the game business and an increase in the value of investment assets held, we recommend taking a look at Netmarble from an earnings turnaround perspective.