New Titles to Be Unveiled in 2H20

The author is an analyst of NH Investment & Securities. He can be reached at jaemin.ahn@nhqv.com. -- Ed.

 

Having proved popular in both Japan and Korea last year, Netmarble’s The Seven Deadly Sins has now been launched globally and is showing favorable initial sales. Believing that its earnings slump last year was the bottom point, we positively view Netmarble’s increasing number of titles. Moreover, we anticipate that the reduced outdoor activities amid the Covid-19 outbreak will have a positive influence on game play sales.

Successful global launch of The Seven Deadly Sins to be followed up A3: Still Alive and Marvel Future Revolution rollouts

We maintain a Buy rating on a TP of W120,000 on Netmarble. Having made its global market debut on Mar 3, The Seven Deadly Sins is showing favorable initial sales. The company is preparing for the Korean market release of A3: Still Alive on Mar 12, and anticipation is rising towards a recently disclosed new planned offering, Marvel Future Revolution (based on Marvel Studio IPs). Additional titles and future business plans are to be unveiled at Netmarble Together with Press (NT), an event which should further stoke market expectations and energize the firm’s share price.

In terms of sales rankings as of Mar 3rd, The Seven Deadly Sins is currently ranking at 25th in the US, 5th in France, 13th in Portugal, 24th in Germany, 2nd in Taiwan, 3rd in Hong Kong, 10th in Thailand, 13th in Singapore, 16th in the Philippines, and is also ranking highly in many other countries. Globally, the game stands in the Top 5 in 3 countries, the Top 10 in 10 countries, and the Top 100 in 39 countries. Noting that the game has remained a steady presence in the sales rankings in both Japan and Korea, we foresee mid/long-term sales success in other countries. We estimate that 2020 global sales of the game will reach W122.3bn (daily average sales of 410mn).

Reduced outdoor activities amid Covid-19 outbreak to boost sales

We believe that a decrease in people’s outdoor activities amid the Covid-19 outbreak will increase average game play time, with the game industry to see higher sales as a result.

New games momentum and y-y low-base effect (tepid OP in 2019) to be in play

Underperformance of its new titles has steadily sapped Netmarble’s recent OP growth. But, starting from 2020, we believe that Netmarble’s earnings will enter a recovery track in line with the start of new title momentum. In addition to the planned introductions of A3: Still Alive and Seven Knights Revolution in 1H20, Seven Knights 2, BTS2, and Marvel Future Revolution are expected to be unveiled in 2H20.

 

 

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