Speeding up Launch of NFT-based Games
The authors are analysts of Shinhan Investment Corp. They can be reached at mj1224@shinhan.com and kimaram@shinhan.com, respectively. – Ed.
3Q21OP reported at KRW12.9bn (+17.7% QoQ)
Com2uS posted operating profit of KRW12.9bn (+17.7% QoQ) on sales of KRW113.1bn (-26.0% QoQ) for 3Q21, coming in far below market consensus of KRW23.2bn. Sales declined sharply, with the QoQ comparison base raised on strong seasonality for major games and launch of a new game in 2Q21. However, operating profit increased as marketing expenses dropped by more than KRW30bn QoQ on improvement in marketing efficiency. Net profit rose by more than KRW50bn QoQ to KRW62bn on revaluation of the company's stake in Wysiwyg Studios on inclusion as a consolidated subsidiary.
Speeding up the launch of NFT-based games and metaverse platform
Com2uS is pushing to launch games utilizing NFTs (non-fungible tokens) earlier than previously expected, with the highly-anticipated Summoners War: Chronicles set to offer P2E (play-to-earn) features. Introduction of a P2E system for the game was originally considered difficult with the development process already completed. However, Com2uS has confirmed plans to: 1) issue NFTs between end-2021 and early-2022; 2) soft launch the game in 1Q22 (one country each in Europe and Southeast Asia); 3) proceed on a sequential global rollout in 2Q22; and 4) complete the launch in major markets in 3Q22. The new game deserves attention given strong popularity of the Summoners War IP, with cumulative downloads exceeding 100mn, and potential inflow of P2E game users.
Expectations are also growing for the company’s metaverse platform, dubbed Com2Verse. Com2uS has invested in various blockchain, content and game companies to build a global metaverse partnership. The combined value of metaverse partner companies now exceeds KRW1tr. Com2Verse combines a blockchain economic ecosystem with gamification features to create a virtual planned city where users can carry out typical real-world functions including working, socializing and entertaining activities. The metaverse ecosystem is set to gradually expand with Com2uS and Gamevil planning to open virtual offices in 2H22 and other partners to following suit.
Target price raised by 37.5% to KRW220,000
Our target price for Com2uS is raised by 37.5% to KRW220,000 with the target PER revised up from 16x to 20x (20% discount to PER average of global peers) on higher expectations for Summoners War: Chronicles and other upcoming releases from the shift to NFT-based games. Com2uS stands out as one of the first companies in the industry to agilely adapt to cutting-edge trends such as NFTs and metaverse.