Netmarble stocks hit 52-week high amid strong Q1 results

[Photo by Yonhap]

Shares of Netmarble Corp. hit a 52-week high on Friday following a surprise first-quarter profit report.

Netmarble’s shares hit a high of 72,400 won ($52.95) in morning trading and the video game maker’s shares were trading at 69,800 won ($51.03) as of 9:27 a.m., up 7.72 percent from the previous trading session.

Netmarble announced on Thursday that its operating profit for the first quarter of 2024 was 3.7 billion won, a turnaround from an operating loss of 28.2 billion won in the same period during the previous year. Market expectations for the company‘s first quarter results were an operating loss of 9.2 billion won, according to Yonhap Infomax.

On the same day, Netmarble also announced that it will sell 1.1 million shares (about 2.6 percent) of its stake in Hybe Co. for 219.9 billion won to improve financial stability and liquidity.

Hyundai Motor Securities Co. raised its investment rating on Netmarble to “buy” from “market perform” on Friday and adjusted its price target from 60,000 won to 80,000 won, citing expectations for improved performance due to the success of new releases.

“Although sales were sluggish compared to forecasts due to the lack of new releases, Netmarble achieved significant profit growth by reducing commission payments and personnel expenses in major cost items,” Hyundai Motor Securities analyst Kim Hyun-yong said, adding that he expects the company’s performance to improve even further thanks to the global popularity of its latest release, “Solo Leveling: Rise.”

Citing an expected gain of 177.7 billion won from the sale of Hybe shares in the second quarter, Kim predicted that the company’s efforts to add liquidity to its assets will have a positive impact on the short-term direction of its share price.

Meanwhile, L&F Co. saw its share price rise more than 6 percent in Friday’s morning session after it raised its profit forecast for this year despite disappointing results.

L&F shares were trading at 161,000 won as of 9:20 a.m., up 9,800 won (6.52 percent) from the previous day. The company‘s share price hit a high of 161,400 won shortly after the opening.

L&F announced on Thursday that it recorded 635.7 billion won in sales and 203.9 billion won in operating loss in the first quarter of 2024. But it revised its 2024 sales target to 3-5 percent from the previous negative 3-5 percent.

Samsung Securities Co. analyst Cho Hyun-ryul said that he expects the company to become profitable starting from the second quarter of the year as customer demand for inventory accumulation grows.