Ncsoft (036570 KS ) a Compelling Buy
NCsoft (036570 KS ) A compelling buy Game 4Q18 review: Earnings come in slightly below our expectation Results Comment For 4Q18, NCsoft reported revenue of W399.7bn (-1% QoQ, -25% YoY). Operating profit February 13, 2019 fell to W112.6bn (-19% QoQ, -41% YoY), due to the recognition of bonus payouts and a one-off payment for the signing of new players for the NC Dinos baseball team. Both revenue and operating profit fell slightly short of our estimates (W407bn and W131bn, respectively). However, revenue from Lineage M continued to grow (+3% (Maintain) Buy QoQ), confirming a longer lifecycle for mobile titles. Target Price (12M, W) 700,000 New title release schedule has yet to be confirmed Investors were looking forward to more clarity on the new-title release schedule, as the Share Price (02/12/19, W) 433,500 company has several times mentioned that it has up to five new mobile titles set for release in 2019. However, it did not offer a timeline for the first mobile title re lease Expected Return 61% during the earnings call. Nevertheless, the company stressed that its plan to globally release blockbuster mobile titles such as Lineage II M , Aion II , and Blade & Soul II in 2019 remains unchanged. In OP (18P, Wbn) 615 addition, a beta test for the upcoming PC/console game The Lineage will be carried out Consensus OP (18F, Wbn) 632 as scheduled in mid-2019. EPS Growth (18P, %) -5.1 No changes to the big picture; recommend Buy from a medium-term perspective Market EPS Growth (18F, %) 5.1 P/E (18P, x) 24.4 We made marginal changes to our 2019 earnings forecast, reflecting the 4Q18 Market P/E (18F, x) 9.1 earnings release (see Table 1).
[Show full text]