"Kakao Games at the Bottom in Earnings and Share Price, Investment Rating Raised to Buy" [Click e-Stock]

Hanwha Investment & Securities Raises Investment Rating to "Buy" Considering Current Price Gap
Lowers Target Price

On August 6, Hanwha Investment & Securities raised its investment rating on Kakao Games to "buy" but lowered its target price from 15,000 won to 10,000 won. The investment rating took into consideration the relative gap with the current share price, while the downward revision of the target price was due to lowered earnings estimates.

Sohye Kim, a researcher at Hanwha Investment & Securities, explained, "While revenues from existing lineups continue to decline and the launch of anticipated titles is being delayed, market confidence in Kakao Games has significantly deteriorated." She added, "However, starting with changes in the governance structure, management’s commitment to enhancing shareholder value is expected to become evident, and if information related to new releases scheduled for the fourth quarter is made public, a gradual recovery in the share price is expected."

Kim assessed that Kakao Games continued to show revenue contraction and an operating deficit trend in the second quarter this year, despite the absence of any special events. She further stated, "In terms of valuation and earnings momentum, short-term investment attractiveness is currently not high."

However, she predicted a gradual recovery in the share price, with major new lineups launching from the fourth quarter onward. She said, "Starting with three new titles in the fourth quarter, followed by OdinQ and Chrono Odyssey early next year, the likelihood of further delays is limited. Many scheduled projects have already been streamlined and optimized, and this is a time when significant profit rebound must be confirmed through new game contributions, rather than merely cutting costs."

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