Two New Games Slated for Launch This Year
The author is an analyst of NH Investment & Securities. He can be reached at jaemin.ahn@nhqv.com. -- Ed.
Two new games based on Com2uS’s representative IP, Summoners War, are slated for launch this year. We view this as an opportunity to verify the value of Summoners War IP, and believe that expectations towards the new lineups will rise gradually going forward.
Chance to verify value of Summoners War IP
We upgrade our rating on Com2uS from Hold to Buy and raise our TP from W125,000 to W130,000. As the release of anticipated new game lineups (Summoners War: Lost Centuria and Summoners War: Chronicles) this year approaches, we expect Com2uS to enter a phase of rising momentum.
Mostly the new games, launched after the success of global version of ‘Summoners War’ in 2014, failed to live up to expectations. We believe that the firm’s two new lineups should perform well as both titles are based on original Summoners War IP. If early results for the new lineups prove favorable, Com2uS should be able to shed its one-game discount and enjoy valuation re-rating.
Noting that Com2uS’s game launch dates have proved flexible in the past, we conservatively predict launches for Summoners War: Lost Centuria in 2020 (3Q20 according to Com2uS) and Summoners War: Chronicles in 1H21 (4Q20 according to Com2uS).
Backed by net cash of W540.7bn as of end-2019 and relatively low valuations versus peers, Com2uS should display downward share-price rigidity.
1Q20 preview: Earnings likely slightly underperformed expectations
Com2uS is expected to report 1Q20 sales of W114.2bn (+6.0% y-y, -5.9% q-q) and OP of W29.1bn (-3.5% y-y, -9.6% q-q), with OP slightly underperforming the consensus of W31.0bn.
While sales of Summoners War are on a gradual decline, as six years have now passed since the game’s launch, we expect sales to pick up in 2Q20 thanks to the firm’s currently-running sixth-anniversary event.