Netmarble
The author is an analyst for NH Investment & Securities. He can be reached at jaemin.ahn@nhqv.com -- Ed.
Weighed upon by delayed new game rollouts, Netmarble’s operating losses inevitably continued in 2Q23. Expectations remain alive, however, for a rebound driven by new lineups to be launched from July. With StoneAge showing solid sales rankings in China, we are also hopeful towards additional China releases.
Looking forward to new global and China lineups
Although maintaining a Buy rating, we lower our TP on Netmarble from W81,000 to W60,000. As games that were expected to launch within 2Q23 have been postponed to 2H23, Netmarble’s operating losses have inevitably continued. However, a number of new offerings are set to be released from July, and if any of these titles show healthy results, the company should enjoy an accelerated earnings recovery.
Grand Cross: Age of Titans (August; early access in Google Play Store from Jun 29), Tower of God: New World (Jul 26), and Seven Knights Idle Adventure (September) are all set to launch in 3Q23. In addition, King Arthur: Legends Rise, Arthdal Chronicles, and Solo Leveling: ARISE should be released within 2023.
StoneAge (released at end-June) is hovering around the number-10 spot in the Apple App Store sales rankings in China. Ni no Kuni: Cross Worlds, The Seven Deadly Sins, A3: Still Alive, and Shop Titans, unveiled at Tencent’s SPARK 2023 game conference, are also on track to roll out this year.
2Q23 preview: Operating loss inevitable
On a consolidated basis, Netmarble should book 2Q23 sales of W614.1bn (-7.0% y-y, +1.9% q-q) and operating loss of W31.1bn (RR y-y, RR q-q), with operating loss to exceed the consensus loss of W22.4bn. In 2Q23, negatives included sales decline amid a lack of new game offerings and a slight uptick in marketing costs (W115.3bn, +15.0% q-q) in the run-up to release for new lineups.