Sector Top Picks: NCSOFT and Krafton
The author is an analyst of NH Investment & Securities. He can be reached at jaemin.ahn@nhqv.com. -- Ed.
New games releases (delayed from 2H21) are to unfold slowly but steadily. From this month, 2H22E titles are to confirm launch schedules and to release videos. Expectations for game shares are to rise gradually.
Game industry shares: Get in early with anticipation set to build
- Having slowed in 2H21, new game launches and related video releases are expected to appear gradually again, starting from June.
- With some game companies struggling to find developers amid a heavy focus on P2E titles since 2H21, new game launches have been delayed. Moreover, sales of existing games have slowed, in turn dampening share prices.
- But, given that the game industry is little impacted by external economic variables (such as economic slowdowns, inflation, and oil prices), the share price doldrums in 1H22 are simply attributable to delayed releases of new games. With launch schedules and related videos to be released, share price momentum should rebound gradually going forward.
Time to pay attention to 2H22 lineups
- We present NCSOFT and Krafton as our game sector top picks. Of note, Krafton’s Callisto Protocol (the most highly anticipated title for 2H22) and NCSOFT’s Throne and Liberty (TL) are both console-based games targeting global markets. Expectations for these new titles should come to be reflected in share prices bit by bit.
- Callisto Protocol (Krafton) was unveiled at Sony’s global new title presentation State of Play on Jun 2, proving that it is a new global triple-A class title. A trailer released in March for TL (NCSOFT) has received more than 8.78mn views to date on YouTube.
- Over the near term, we advise investors to pay attention to game companies that are to roll out new titles in June. Scheduled for release on Jun 23, Wemade Mir M received favorable reviews at CBT in May. With the global P2E version slated to be released in 3Q22 after the Korean launch, expectations of success are likely to sustain throughout the run up to the 3Q22 global launch. Meanwhile, Com2uS’s Summoners War: Chronicles is to be rolled out in Korea in mid-July, with a global P2E version to follow in October. Kakao Games’ Umamusume is within a new genre that is not familiar with most Korean gamers but which has gained high popularity in Japan since the title’s debut last year.