Upbeat on successful expansion of Bless IP

The author is an analyst of Shinhan Investment Corp. He can be reached at mj1224@shinhan.com. -- Ed.

 

Neowiz continues to expand on its Bless IP with the PlayStation 4 version of Bless Unleased(in-house developed console game) scheduled for release in 3Q20 following the recent launch of the Xbox version. Going forward, the console game could be converted to a PC version for another release through the online gaming platform Steam.

We also expect a continued inflow of royalty income from Bless IP-based mobile games. JoyCity’s Bless Mobile ranked 10th among top-grossing games on Google Play in Korea upon its release on March 31, and is scheduled for a global launch in 2H20. Kingdom: Flames of War, the Bless IP-based MMORPG released by Fowgames on May 13, currently ranks 10th on Google Play. Neowiz, which receives royalties from the game, also holds a 40% stake (valued at KRW5bn) in Fowgames and stands to benefit from the rise in the game developer's enterprise value. Meanwhile, Neowiz is expected to see new game momentum in the near term with Longtu Games gearing up for the release of a Bless IP-based mobile game in China within the remainder of 2020.

Deregulation to have positive impact on cash-cow web board games from 2Q20

Excessive regulations placed on web board games have been eased following complaints that the daily loss limit of KRW100,000 and 24-hour shutdown period for accounts exceeding the limit overlapped with existing restrictions on total spending and betting amounts. With the daily loss restrictions that had limited play ability removed from April, positive impact on web board games should become visible from 2Q20. As a result, we expect Neowiz's web board game sales to continue on a steep growth track (+27% YoY in 2019, +26% YoY in 2020F) going forward.

Retain BUY and raise target price by 3.4% to KRW30,000

We retain BUY on Neowiz and raise our target price to KRW30,000 with earnings forecasts revised up in reflection of the success of Bless IP-based games. Investment points are: 1) upbeat outlook for further growth of the cash-cow web board game business thanks to deregulation; 2) continued success of newly-released games based on the Bless IP; and 3) new game momentum expected from the launch of the Bless IP-based mobile game by Longtu Games in China, release of the PlayStation 4 version of Bless Unleased, and publishing of Lost Ark in Japan within this year.

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