Netmarble’s earnings have been slow while its valuation is high, said KTB Investment and Securities on Feb. 14 downgrading the recommendation to a “reduce” from a “hold” and lowering the target price to 90,000 won (US$80.00) from 94,000 won.
Its operating profit in the fourth quarter last year has plunged 59 percent on-year to 38 billion won widely missing market expectations, even though its marketing costs declined as it did not release any new games. Most of its existing games, from “Harry Potter” and “Seven Knights” to “Modoo Marble,” reaped less revenue while rollout of some of new games that were scheduled for the first half of this year has been pushed back, said analyst Lee Min-a.
Its stock price has risen from expectations that it could acquire Nexon but to secure significant stake it will need capital and the costs will offset the synergies from the acquisition, she noted, adding that eliminating the premium will rather bring down the stock price.
By Hwang You-mee (firstname.lastname@example.org)