Share Price Rebound Unlikely Prior to Release of a New Hit

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

 

Com2uS has been experiencing a share price correction due to less-than-anticipated sales of Summoners War: Lost Centuria. Given its limited number of successful games over the last few years, a share price rebound is unlikely prior to the release of a new hit.

Adhere to conservative stance prior to new hit game release

Maintaining a Hold rating, we lower our TP on Com2uS from W120,000 to W110,000, reflecting a cloudy outlook on the firm’s new game lineup and lack of new game momentum through early 2022 due to the failure of Summoners War: Lost Centuria.

Although the firm has started taking pre-orders for Valkyrie Rush (developed by its subsidiary Novacore), new game momentum is still not in sight, as Summoners War: Chronicles, The Walking Dead: Identities, and World of Zenonia are all scheduled for release in 2022.

Since seven years have passed since Summoners War: Sky Arena (Com2uS’s main income source) was released, the game’s sales are inevitably declining.

We calculate our TP of W110,000 by applying a P/E of 15x to 2022F EPS of W7,059.

Keep an eye on success of Cookie Run: Kingdom in Europe

Com2uS has recently entered an agreement to be in charge of the support and marketing in Europe for Cookie Run: Kingdom by Devsisters, which is drawing strong global attention. Given that the game has been successful in Korea, the US, and Japan, solid earnings are expected in Europe as well, a development which should help Com2uS’s share price to rebound in early 2022. However, since Com2uS is not a publisher and thus will only be supporting the game service, the revenue share will likely be relatively less substantial.

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