Netmarble Neo to go public this year

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By Anna J. Park

Netmarble's subsidiary game company Netmarble Neo, which is preparing for an IPO within this year, sent out requests for proposals (RFP) recently to brokerages firms to select underwriters for the public offering.

Netmarble Neo developed Netmarble's hit-game “Lineage 2: Revolution” in 2016, which was its first mobile massively multiplayer online role-playing game (MMORPG), followed by “The King of Fighters Allstar” in 2018. Its new mega game, “Cross Worlds,” is waiting for its first global release, including in Japan and in Taiwan, later this year.

Market watchers say the timing of the IPO has been set, as the game company faces the release of “Cross Worlds,” which is expected to come out sometime during the first half of this year.

The public offering is in line with Netmarble's previous stance to list its competent subsidiaries that publish popular games. Among various subsidiaries, Netmarble Neo is assessed as being one of the top profit grossers. The company earned a net profit of 38.6 billion won ($34 million) and a revenue of 88.1 billion won last year.

At the over-the-counter market, where game company's unlisted stocks are traded, the share traded at 103,000 won as of Wednesday. The price hit a 52-week high of 119,000 won last Friday over the news of its IPO, which is up more than five times since the stock price hit its 52-week low of 20,000 won a year ago amid the COVID-19 shock. At the current price, the company's market cap stands at over 1.2 trillion won.

The market cap estimate on the OTC market is not that different from a general value estimation of a game company. If a price-to-earnings ratio (PER) of 34.9 times is applied to the company's annual net profit of 38.6 billion won last year, the firm's market cap is estimated at around 1.34 trillion won, very close to the OTC market's estimate.

Netmarble is the largest shareholder of Netmarble Neo with 79.65 percent stake. Netmarble is also expected to benefit from the IPO of Netmarble Neo, as the success of the public offering could stimulate the listing of other subsidiaries.