Brokerages rushing to lower target price for NCSOFT

By Jun Ji-hye

Securities firms are cutting their target prices for game developer and publisher NCSOFT's stocks to 480,000 won ($449) from 600,000, citing news about the delay in releasing its new game.

NH Investment & Securities said Friday that NCSOFT was expected to release its flagship game “Blade & Soul 2” within this year, but this has been delayed until next year. This led to a decrease in the firm's stock prices the previous day.

A chief financial officer (CFO) of the game firm said in a first-quarter earnings conference call Thursday that the release of the new game has been delayed as there were amendments to be made.

The CFO did not elaborate on the exact timing for the release, only saying “sometime in the next year,” according to an NCSOFT official.

“Although NCSOFT's earnings were satisfactory, the firm's stock prices fell Thursday because the news about the delay in releasing its new game, which has received high expectation, was made public,” said Ahn Jae-min, an analyst from NH Investment and Securities. “Concerns are growing that the firm's new game lineup this year only includes Aion Legions and some others.”

Aion Legions is a role playing game (RPG) made with the content of Aion.

Regarding reasons for the delay, the NCSOFT official said the firm aimed at launching a full, high-quality massive multi-user online role playing game (MMORPG) that could greatly impact the market, but there have been opinions over the need for making up for some weak points.

“We have been making modifications to the game from the planning stage,” the official said.

On Thursday, the game publisher reported strong performance in the first quarter, saying its operating profit rose 570 percent year-on-year to 203.9 billion won, and sales jumped 98.4 percent on-year-year to 475.2 billion won.

Analyst Ahn attributed the strong performance to the continued popularity of the firm's mega-hit mobile game, Lineage M.

He said royalty revenue of the firm sharply increased to 84.2 billion won since Lineage M was released in Taiwan in December, adding that good performance in that country is expected to continue for the medium and long term as the firm will consistently update the game as it does in Korea.

Lineage M has contributed significantly to the firm's performance, remaining at No. 1 on Google Play Store.