[Click e-Stock]"Krafton Set to Exceed Earnings Expectations Driven by PUBG Growth"

Samsung Securities: "Revenue and Operating Profit Expected to Exceed Market Expectations"
However, Target Price Lowered Due to Decline in Peer Valuations

On July 23, Samsung Securities projected that Krafton would post a strong earnings surprise, driven by the continued growth of its flagship game, BATTLEGROUNDS (PUBG).

Donghwan Oh, a researcher at Samsung Securities, stated, "Sales of the Steam (gaming platform) version of PUBG are expected to increase by 74% year-on-year due to the launch of its well-made mode and the Black Market, while Subnautica 2 is anticipated to have sold over 5 million copies, generating sales of 165 billion won and driving PC revenue up by 140% compared to the same period last year."

Samsung Securities expects Krafton's total revenue for the second quarter to reach 1.274 trillion won (up 92.5% year-on-year), and operating profit to be 470.2 billion won (up 91.1%). These figures surpass the market's year-on-year expectations of 6.8% and 28.1%, respectively. Mobile revenue is also forecast to rise by 7.8% year-on-year, making a positive contribution to overall revenue growth.

Steam PUBG has achieved significant growth in traffic and revenue compared to the same period last year, driven by the introduction of new modes such as Xenopoint and Payday Mode, as well as major collaborations including the resale of the Stellar Blade Eve Contender and aespa skins. Samsung Securities believes these developments have alleviated concerns over PUBG having reached a peak, which were raised last year. The firm also projects that continued collaborations with idol groups, supercar brands, and animation intellectual property (IP) will sustain this growth momentum through the second half of the year.

There are also high expectations for new releases. Next month, Krafton is set to unveil five new titles at Gamescom in Germany. Palworld, which was officially released on Steam on July 13, has attracted up to 960,000 concurrent users, becoming a major hit. Samsung Securities predicts that, bolstered by the success of the original game, market expectations for Palworld Mobile—scheduled for release next year—will also continue to rise.

However, the target share price was adjusted downward from 340,000 won to 320,000 won, reflecting a decline in peer company valuation. Samsung Securities applied a 12-month forward EPS and a target price-to-earnings (P/E) ratio of 11.5, with the target P/E reflecting the average P/E of domestic and international gaming companies and factoring in a 5% discount rate to account for limited new title momentum in the second half.

Researcher Oh commented, "Due to the recent share price decline, the 12-month forward P/E has dropped to 7.8. With sustained growth in PUBG, new game announcements at Gamescom, and rising expectations for Palworld Mobile, we anticipate a rebound in Krafton's share price in the second half of the year."

This content was produced with the assistance of AI translation services.