Launches Global Lite Game Business
The author is an analyst of NH Investment & Securities. He can be reached at jaemin.ahn@nhqv.com. -- Ed.
Gamevil’s Global Lite Game business should help it secure lineups and stakes for small/mid-sized game companies.
Making changes to game business; beefing up capabilities as holding company player
We reiterate a Hold rating and a TP of W38,000 on Gamevil. The firm has begun its Global Lite Game business (ie, discovering promising games and launching them in the global market) in earnest, and it has expanded its stake in cryptocurrency exchange Coinone, leading to earnings improvement. However, any meaningful increase in EV looks unlikely until it shows sound game business earnings and investment performance as a holding company player.
Gamevil’s Global Lite Game business supports small/mid-sized game companies’ forays into overseas markets, via equity investments. Moving ahead, this venture should contribute to Gamevil’s sales and investment returns. We believe that the business will gradually bear visible fruits, noting that Arcana Tactics and Roem were released in 1H21, and that Eternal Sword (publishing), and stake ownership in developer King Media, Project D (developed in-house), and Chromatic Soul (developed in-house) are all expected to be unveiled within the year.
For 2022, we project sales of W157.8bn (+19.1% y-y; operating revenue of W121.3bn (+18.3% y-y), income from affiliates of W36.4bn (+21.9% y-y), and OP of W39.3bn (+43.5% y-y; game business OP of W2.8bn).
3Q21 preview: Earnings to come in healthy
We expect Gamevil to post 3Q21 sales of W36.5bn (+7.0% y-y, +23.4% q-q) and OP of W9.1bn (+64.8% y-y, +214.4% q-q), with OP meeting consensus of W9.3bn. The consolidation of Coinone’s earnings from 3Q21 bodes well for Gamevil’s earnings.