크래프톤 52주 신고가 ★★KR Internet/Game: Krafton (259960) Spot Call Takeaway - Reliable PUBG

We held a spot call on Jun 17 with Krafton (259960), street’s sector favourite, who affirmed 1) solid traffic and contents on PC platform, 2) brisk 2H24 outlook, and 3) new title pipeline. KIS Games/Internet Analyst Hoyoon Jung recently raised Krafton TP to W310k (20x 12MF P/E) after a consensus-beating 1Q24 results. He lifted FY24 OPe by 16.3% to W903bn (above current consensus of W867.4bn) as the Battleground IP shows no sign of slowdown. Recommend BUY & HOLD as Krafton stands out while peers' earnings tumble; maintain as sector top-pick. Full spot call note attached with detailed summary below. Link to our recent TP hike report in English: https://vo.la/GtQoH

Key indicators & contents
- PC: Solid traffic and content. Peak daily concurrent user 600k~700k vs 400k in 2Q~3Q23. IP collaborations included Ducati in Apr, and NewJeans in Jun. Lamborghini collaboration scheduled for 3Q
- Mobile: Global & India is maintaining stable figures but expecting traffic and monetization level to slip QoQ as 2Q is the back-to-school season. China new content update should make up for the loss from 1Q24. Following successful IP collaboration with SpyxFamily, another collaboration with Japanese animation IP Dragon Ball is scheduled for Jun

Brisk 2H24 outlook
- In 2Q24 QoQ slip is inevitable due to seasonality, high 1Q24 base, back-to-school season. However, while PUBG maintains healthy level of key KPIs without signs of stabilization, the new title release catalaysts, including Dark and Darker Mobile global release in 4Q24 and small Steam games will help contribute to the topline growth.
- Unlike the global game companies, Krafton is actually in recruit mode (3,300 employees -> 3,500 employees by yearend) and plans to spend marketing (6~7% marketing-to-revenue ratio). Nevertheless, Hoyoon forecasts margin will still be high on 37% level in 2H24 (vs NCSoft 2H24 OPM 10.5%) – KISe 2H24 sales W1.19tn (+20% YoY), OP W444bn (+25% YoY).

New title pipeline
- Dark and Darker Mobile is on track to be released globally in late-Nov this year after beta tests in key countries and showcase at the Gamescom. inZoi, which is also another widely anticipated game to target competition vs Sims, will also be showcased at Gamescom and likely be released in early-'25
- Investors may still have the scars from the previous new title releases such as Callisto Protocol. However, Co reassured that from 2023 (post-Callisto), the management’s view on game development has dramatically changed. From a traditional approach of allowing full autonomy to the development teams/studios, to a hands-on oversight for the projects to guarantee the quality and 2nd party publishing strategy.

KIS IPO - SEERS TECH {458870 KS Equity} IPO listing debut today at W17k. Insto 1.084x (8% of allocation with lock-ups)/retail 1,437x covered. Day 1 free float: 3.4m shrs (28% of outstanding)*
=> Much interest in Co's ECG biz and the telemedicine solution market amid the recent doctor's strike in Korea against the govt's push for significantly raising the medical student quotas in Korea.**

- Seers Technology provides various telemedicine solutions to local/overseas hospitals; the flagship products are “mobiCARE”, wearable ECG (electrocardiogram, AKA Holter monitor) analysis subscription service, and “thynC”, real-time patient monitoring.
- Co's “mobiCARE” is used at +770 medical institutions nationwide and accounts for c. 70% of the domestic wearable ECG market. The ECG treatments in Korea totalled 460k cases in '23, with the majority of the cases for the ~2 day treatment (80% weight), but the 2~7 day treatment is rapidly increasing (20% weight) upon introduction of new insurance fee in '22, and Seers now commands 70% m/s as a first mover and thanks to the partnership with Daewoong Pharma. The FDA approval in the US is also scheduled for next month.
- Further mid-long term growth drivers includes; 1) overseas expansion, notably in 6 countries (Mongolia, Hong Kong, Kazakhstan, Thailand, Vietnam, and the UAE); 2) entering the large-scale health check-up market. The long-term vision is to build a ‘wearable AI platform’ using ECG data.

Earnings & Guidance
- FY23a Sales/OP/NP: W1.8bn/-W9.8bn/-W9.9bn
- FY24e Sales/OP/NP: W7.4bn/-W5.8bn/-W5.8bn
- FY25e Sales/OP/NP: W20.6bn/W2.2bn/W2.2bn
- FY26e Sales/OP/NP: W34.4bn/W12.8bn/W12.8bn

Japan Equity Movers: Keyence, Shin-Etsu, Fujitsu, Roland DG

Topix closes 0.9% higher, led by marine transportation and real estate sectors. Nikkei 225 +0.8%.

ADVANCERS
• Keyence (6861) +7.8%; the Japanese factory automation equipment company reported strong fourth-quarter results and operating income that beat the average analyst estimate
• Roland DG (6789) +3%; management plans to raise its buyout offer price to at least 5,300 yen/share to contend with a rival bid by Brother Industries, Nikkei reported
• Mitsubishi Estate (8802) +1.8%, Mitsui Fudosan (8801) +3.6%, Sumitomo Realty (8830) +1.9%; Japan’s real estate shares lead gains on the Topix index after the Bank of Japan held interest rates steady

DECLINERS
• Shin-Etsu Chemical (4063) -6.4%; the Japanese chemicals company’s fourth-quarter operating income and shareholder return policy disappointed investors
• Fujitsu (6702) -2.3%; the Japanese IT firm reported fourth-quarter operating income that missed analyst estimates

*하나금융지주 1분기 연결 순익 1.03조원, 예상치 8,643.9억원

기아 1분기 OP 3.43조!

• Kia 1Q24 OP 3.4tn (+19.2% YoY), beat vs W2.8tn

Japan Equity Movers: Astellas Pharma, Lasertec, Nippon Yusen

Topix closes 1.9% lower, led by tech and machinery companies. Nikkei 225 -2.7%.

ADVANCERS
• Astellas Pharma (4503) +1%; Rated new outperform at Macquarie
• Sakura Internet (3778) +19%; Japan approves $470 million support to companies including Sakura Internet
• Nippon Yusen (9101) +1.5%, Mitsui OSK (9104) +1.2%; Shipping stocks climb on speculation that conflict in the Middle East will lead to higher freight rates and boost the companies’ profits

DECLINERS
• Tokyo Electron (8035) -8.7%, Lasertec (6920) -8.4%, Disco (6146) -8%, Rorze (6323) -7.4%, Screen Holdings (7735) -7%, Socionext (6526) -6.6%; Semiconductor-related stocks fell after TSMC scaled back its outlook for a chip market expansion

IRANIAN OFFICIAL TELLS REPORTERS THERE WAS NO MISSILE ATTACK ON IRAN
- SAYS EXPLOSION WAS A RESULT OF ACTIVATION OF AIR DEFENCE

ISRAELI STRIKES ON IRAN

- EXPLOSIONS REPORTED IN ISFAHAN PROVINCE IN CENTRAL IRAN

- NEAR-SIMULTANEOUS REPORTS OF BLASTS IN IRAQ AND SOUTHERN SYRIA

- US OFFICIAL CONFIRMS TO ABC NEWS THAT ISRAEL CARRIED OUT STRIKE INSIDE IRAN

- IRANIAN STATE-LINKED MEDIA CONFIRM EXPLOSION IN ISFAHAN

- SIGNIFICANT RE-ROUTING OF COMMERCIAL PLANES AMID CLOSURE OF KEY PARTS OF IRANIAN AIRSPACE

- OIL PRICE SURGES BY NEARLY 4% AMID CONCERNS OF FURTHER ESCALATION ...

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The Spectator Index (@spectatorindex) on X

ISRAELI STRIKES ON IRAN - Explosions reported in Isfahan Province in Central Iran - Near-simultaneous reports of blasts in Iraq and southern Syria - US official confirms to ABC News that Israel carried out strike inside Iran - Iranian state-linked media…

Japan Equity Movers: Mitsui Fudosan, Fast Retailing, Rorze
Topix closes 0.5% higher, led by real estate companies. Nikkei 225 +0.2%.

ADVANCERS
• Rorze (6323) +23%; conducts 10-for-1 stock split effective Sept. 1; forecasts 31% increase in full-year operating profit
• Belc (9974) +14%; sees full-year opearting profit rising 21% y/y
• SK Japan (7608) +11%; reports 72% increase in full-year operating profit
• Mitsui Fudosan (8801) +7.8%, Tokyo Tatemono (8804) +7.6%, Mitsubishi Estate (8802) +6.9%, Sumitomo Realty (8830) +5.8%; Mitsui Fudosan announces business plans that included a buyback, a return-on-equity target and payout ratio; other real estate shares rise; Sumitomo Realty and Mitsubishi Estate also advance after Mizuho raised its rating to buy
• JCR Pharma (4552) +5.4%; raised to buy from neutral at Mizuho Securities

DECLINERS
• Sansan (4443) -8.7%; third-quarter operating income misses average analyst estimate
• Fast Retailing (9983) -4.4%; second-quarter operating income misses analyst estimates on weak sales in China