“DoubleUGames: M&A Outcomes Improve Shareholder Returns”

Daishin Securities announced on December 1 that the revenue base of the subsidiaries of DoubleUGames, which had contributed to the weak performance this year, is on the rise, and they anticipate potential growth in both top-line revenue and profit contribution in 2026. The firm upheld its “Buy” investment rating with a target price of 70,000 won. Projections for DoubleUGames’ consolidated revenue in 2026 are set at 816.1 billion won, showing a 14.7% increase year-on-year, while operating profit is expected to reach 275.7 billion won, a 21.9% rise. This forecast suggests a recovery from the profitability decline experienced this year.

Daishin Securities’ researcher, Lee Jieun, mentioned that the recently integrated Paxie Games and Wow Games, which accounted for approximately 15% of the company’s overall revenue by the third quarter of this year, are poised to continue contributing to revenue growth in 2026. Furthermore, the company is planning additional mergers and acquisitions (M&A) next year, supported by about 750 billion won in net cash reserves.

In addition to expanding its revenue-generating capabilities, DoubleUGames is actively engaging in share repurchases. It is estimated that by the end of this year, treasury shares will represent about 10% of the total shares outstanding. Lee highlighted that should an amendment to the Commercial Act, mandating the cancellation of treasury shares, be passed in the future, the company might convert its treasury shares to cancellations, enhancing its shareholder return policy. Moreover, the company’s dividend scale has been growing every year, with the possibility of reduced dividends starting from the year-end dividend in 2025.

Lee also commented on the undervaluation of DoubleUGames’ current share price. Despite the anticipated improvement in performance in 2026, the 12-month forward price-to-earnings ratio (PER) is currently at approximately 6 times, below the lower end (8 times) observed after the DoubleDown Interactive acquisition impact. Lee suggested that considering structural growth and enhanced shareholder returns, there is considerable potential for the normalization of valuation in 2026. This assessment indicates a significant opportunity for investors given DoubleUGames’ promising outlook for the coming year.