The author is an analyst of NH Investment & Securities. He can be reached at email@example.com. -- Ed.
After suffering through new game release disappointments over the past couple of years, JoyCity is seeing strong early results for Bless Mobile (launched on Mar 31). More new games are to be rolled out in 2H20.
Bless Mobile showing solid early sales
We raise our TP on JoyCity from W8,000 to W10,000. Released on Mar 31, Bless Mobile is receiving a warm reception out of the gate. Led by the success of the game, JoyCity’s earnings are to strengthen in 2020.
Developed by subsidiary Think Fun and published by JoyCity, Bless Mobile has scooped up first place in terms of the download standings, and it hit 14th in the sales rankings on the first day of its launch (Mar 31). Representing the first MMORPG that JoyCity has published, Bless Mobile is showing rosy promise. We still need to monitor whether high sales rankings for the game will sustain beyond the early going, but should the game carve out a steady presence somewhere in the 20s, we expect daily sales to clock between W50mn~W100mn.
However, despite this positive news, we maintain a Hold rating on JoyCity for now. While the anticipated sales recovery this year bodes well, the company’s high valuations (2020E P/E 23.8x) represent a burden.
Reduced outdoor activities amid Covid-19 to push up earnings
On a consolidated basis, we forecast 2020 sales of W111.5bn (+8.1% y-y), OP of W10.7bn (+25.1% y-y), and NP of W5.9bn (TTP y-y).
Besides Bless Mobile, JoyCity is preparing to launch at least four new games this year, including Cross Fire: War Zone (genre: war-simulation; developer: Ndream), Terra: War of Argon (war-simulation; Ndream), Hero Ball Z (hyper-casual; Mujito Games) and Project M (RPG; Mojito Games).
We forecast the firm will book 1Q20 sales of W25.3bn (+1.0% y-y, -2.0% q-q) and OP of W2.6bn (+1644% y-y, -22.6% q-q). Bless Mobile should begin making meaningful earnings contributions from 2Q20.