Sustaining growth beyond PUBG

Research evidence excerpt

Sustaining growth beyond PUBG

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Krafton

Reiterate Rating: BUY | PO: 340,000 KRW | Price: 239,500 KRW

Reiterate Buy on strong margins and shareholder returns 14 July 2026

We reiterate Buy on Krafton and maintain our PO of W340,000, supported by sustainable Equity

profitability, visible shareholder returns, and progress in IP diversification. We expect

Krafton to maintain a mid-20% OP margin in 2027/28, supporting its shareholder-return

Key Changesprogram of W300bn dividends, as well as at least W700bn in treasury share repurchases

and cancellations over 2026-28. Subnautica 2’s stronger-than-expected performance (W) Previous Current

further validates Krafton’s ability to expand its profitability beyond PUBG. 2026E Rev (m) 4,560,242.2 4,660,867.2

2027E Rev (m) 4,897,231.2 4,847,716.4

2028E Rev (m) 5,187,707.1 5,134,414.9Raise 2026E, but cut 2027E/28E on PUBG normalization

We raise our 2026E revenue to reflect the stronger-than-expected contribution from 2026E EPS 19,381.12 20,746.60

Subnautica 2. However, we lower our 2027E/28E by 1%/1% as we incorporate a more 2027E EPS 25,226.68 24,385.19

conservative outlook for both PUBG PC and mobile growth momentum, which we expect 2028E EPS 29,074.43 28,170.80

to normalize following an elevated monetization. Our 2027E/28E revisions are largely

top-line driven, with no material changes to our operating expense assumptions. Jinhan Chun >>

Research Analyst

Merrill Lynch (Seoul)

+82 2 3707 04622027E EPS roll-forward offsets lower target P/E jinhan.chun@bofa.com

We apply a 14x P/E target multiple to our 2027E EPS, rolling forward from 2026E while

Simon Woo, CFA >>

lowering our target multiple from 18x. The previous premium reflected expectations for Research Analyst