NCSOFT: 1H22 is lower than 2H22 May-02-2022

Anticipating new titles in 2H22

- We keep a Buy rating and a TP of W600,000 on NCSOFT. Day to day normal deals for Lineage W have slipped to some degree from the good 'ol days after its send off, yet generally speaking deals for the game have an entered stable area, with the title keeping up with number-one deals positioning status in significant business sectors. In general top-line force ought to revive upon the arrival of new contributions in 2H21, however assumptions will probably be reflected in stock costs just when related recordings or new titles are delivered. The new arrangement to be carried out this year is to incorporate Lineage W Global (3Q22) and Throne and Liberty (TL; 4Q22). Also, five games (Project E, R, M, Blade and Soul S, and Aion 2) are being ready for presentation from 2023.

1Q22 see: Earnings to show up sound, helped by cost adjustment

- We figure combined 1Q22 deals of W727.0bn (+41.9% y, - 4.0% q) and OP of W174.5bn (+207.5% y, +59.4% q), with OP surpassing our past gauge of W135.6bn.

- Deals for Lineage W are assessed to have added up to W304.6bn (everyday normal: W3.4bn; - 14.8% q). Everyday normal deals have fallen contrasted with the underlying send off, yet the title actually positions number one in Google Play Store deals in both Korea and Taiwan. Of note, the company's 1Q22 outcomes are interestingly to reflect full-quarter deals for the title.

- Deals for both Lineage M (W93.2bn, - 46.0% y, - 5.0% q) and Lineage 2M (W117.1bn, - 23.1% y, +5.0% q) had shown sharp drops because of the send off of Lineage W in 4Q21, yet entirely reasonable quit falling in 1Q22.

- We size Guild Wars 2 (delivered on Feb 28) deals at W33.5bn (+50.8% q).

- Work and showcasing costs had intensified altogether in 4Q21 close by the send off of Lineage W, yet with related impacts blurring, they probably facilitated in 1Q22. We gauge 1Q22 work expenses of W240.8bn (+3.5% y, - 6.0% q) and showcasing costs of W76.1bn (+38.5% y, - 35.6% q).

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