No Change in Position as Com2verse and P2E Game Developer
The author is an analyst of NH Investment & Securities. He can be reached at jaemin.ahn@nhqv.com. -- Ed.
We anticipate a recovery in Com2uS’s game sales from 2Q22 and a rebound in sales at WYSIWYG Studios (subsidiary) from 2H22. The launch schedules of some planned P2E games may be delayed due to Terra (mainnet) issues, but the firm is to use the time to increase development completeness.
No change in position as Com2verse and P2E game developer
- We maintain a Buy rating, but we lower our TP on Com2uS from W150,000 to W110,000. Although various unfavorable factors have negatively affected the company’s recent earnings and share price performance, its earnings should improve on likely higher game sales in 2Q22, planned launches of new titles during 2H22, and an expected operating income turnaround at subsidiary WYSIWYG Studios.
- Com2uS’s share price has slid sharply as of late on a steep drop in cryptocurrency prices and uncertainties towards the P2E market. And, its share price has been hurt by the fact that the mainnet for C2X (the P2E game coin of Com2uS Holdings and Com2uS) was Terra. Moreover, WYSIWYG Studios (incorporated on a consolidated basis) turned to the red (y-y and q-q) in 1Q22.
- Com2verse (established as a separate corporation) is to be made into a metaverse platform along with WYSIWYG Studios. Its virtual office service is slated to be opened in 2H22, and partnerships with Hana Financial Group, Kyowon, and Kyobo Book have been inked.
- With beta testing having recently been conducted in Thailand, Summoners War: Chronicle is to be launched in Korea in July, with the P2E-applied version slated for global release in October. The rollouts of several P2E titles (including Summoners War: Lost Centuria, Ace Fishing: The Crew, The Walking Dead: Identities, World of Zenonia, Kritica, and Idle Luka) may be delayed due to C2X’s mainnet conversion issues, but we still expect 7~8 P2E games to be introduced within 2022.
1Q22 review: Books weak earnings
- Com2uS posted consolidated 1Q22 sales of W133.3bn (+14.3% y-y, -24.3% q-q) and operating losses of W2.7bn (TTL), with operating income coming in far below both our estimate of W10.7bn and consensus of W7.6bn. The firm’s game business showed OP of W8.4bn, but WYSIWYG Studios suffered operating losses of W11.1bn. Moving ahead, sales are expected to improve in line with 8th anniversary celebration events for Summoners War in 2Q22. Also of positive note, sales of three of the company’s baseball titles (MLB 9Innings 22, Com2uS Baseball 2022, and Com2uS Baseball V22) reached W13bn in April amid baseball season.