Company April 6, 2012

Internet NCsoft (036570 KS) Daewoo Securities Co., Ltd. Chang-kwean Kim 2 likely to be more successful than Aion +822-768-4321 [email protected] Increased foreign buying since the third CBT for

Guild Wars 2 is a massively multiplayer online role playing game (MMORPG) that is being developed by NCsoftÊs wholly-owned subsidiary ArenaNet (based in the US).

NCsoft conducted small-scale first and second closed beta tests (CBT) for the game in December. And the company carried out a 72-hour third CBT during March 24th~26th. Detailed content was unveiled during the third CTB, and NCsoft has received positive feedback from gamers. Some gamers even project that Guild Buy (Maintain) Wars 2 could find more success than Diablo 3 (to be released by Blizzard Target Price (12M, W) 510,000 Entertainment). Indeed, since the third CBT was completed, foreign investors have Share Price (04/05/12, W) 321,000 been increasing their buying of NCsoft shares. Expected Return (%) 58.9 EPS Growth (12F, %) 109.7 NCsoft is scheduled to begin pre-sales for Guild Wars 2 on April 10th (including pre- Market EPS Growth (12F, %) 16.7 orders and pre-purchases) via the buy.guildwars2.com website. The game will be P/E (12F, x) 18.9 available in three versions (a standard edition priced at US$59.99, a digital deluxe Market P/E (12F, x) 10.1 edition at US$79.99, and a collectorÊs edition at US$149.99). All pre-sale buyers will KOSPI 2,028.77 Market Cap (Wbn) 7,016 be allowed to participate in upcoming CBT events. NCsoft plans to hold a larger- Shares Outstanding (mn) 22 scale fourth CBT at end-April. Avg Trading Volume (60D, '000) 184 Avg Trading Value (60D, Wbn) 53 Outlooks for two potential blockbusters to become clearer in April Dividend Yield (12F, %) 0.3 The outlook for Guild Wars 2Âs CD sales should be clarified after the pre-sale and the Free Float (%) 65.6 52-Week Low (W) 246,000 fourth CBT. Investors can gain access to information about order trends and sales 52-Week High (W) 386,000 performances at online distribution channels via the gameÊs website. NCsoft Beta (12M, Daily Rate of Return) 0.5 confirmed that it will recognize US$48 (vs. retail price of US$59.99) in net revenues Price Return Volatility (12M Daily, %, SD) 2.7 for each standard CD copy of Guild Wars 2 sold. Furthermore, NCsoft will generate Foreign Ownership (%) 27.8 additional revenues via in-game item sales. Meanwhile, NCsoft plans to release Major Shareholder(s) additional scheduling details for Blade & Soul on April 21st. We forecast the third Kim Taek Jin et. Al (25.39%) CBT for Blade & Soul to come in end-April. NPS (9.21%) Treasury shares (9.02%) Guild Wars 2’s website has drawn 9 times more visitors than Aion’s Price Performance (%) 1M 6M 12M NCsoftÊs Aion recorded 1.5mn CD sales in the US and Europe in 2009. Guild Wars Absolute 14.2 2.1 25.2 1Ês CD sales volume exceeded 7mn over the last three years. After comparing the Relative 13.6 -19.7 29.9 number of unique visitors to the Aion website in 2009 (in the two months before the Key Business pre-sale) to the number of unique visitors to the Guild Wars 2 website, we found 1 (35.9%) Lineage 2 (9.2%) that the number of visitors to the Guild Wars 2 website (178,000) has far exceeded Aion (33.6%) the Aion figure (21,000). As such, we believe that Guild Wars 2 CD sales are highly Overseas (19.2%) likely to surpass AionÊs. We assume that Guild Wars 2 CD sales in the US and Europe will reach 3.12mn in 2012.

Share price FY Revenues OP OP Margin NP EPS EBITDA FCF ROE P/E P/B EV/EBITDA 160 KOSPI (Wbn) (Wbn) (%) (Wbn) (Won) (Wbn) (Wbn) (%) (X) (X) (X) 140 12/10 515 251 48.7 174 7,985 265 200 24.1 26.1 5.7 15.1 120 12/11 500 197 39.4 177 8,104 207 7 19.9 37.9 7.1 29.3 100 80 12/12F 753 388 51.6 372 16,998 406 367 32.6 18.9 5.4 14.8 60 12/13F 960 527 54.9 504 23,044 538 460 32.7 13.9 4.0 10.4 40 12/14F 1,071 598 55.9 589 26,957 607 506 28.8 11.9 3.0 8.4 3/11 7/11 11/11 3/12 Notes: All figures are based on non-consolidated K-IFRS; NP refers to net profit attributable to controlling interests

Source: Company data, KDB Daewoo Securities Research estimates

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