[Click eStock] "Joycity, Earnings Improvement Expected with New Releases in Second Half"

[Asia Economy Reporter Koo Eun-mo] Samsung Securities evaluated that Joycity is expected to improve its performance with the release of new titles in the second half of the year.

According to Samsung Securities on the 19th, ‘Bless M,’ released at the end of March, succeeded in attracting attention by recording initial daily sales of over 100 million KRW. Researcher Oh Dong-hwan of Samsung Securities stated in a report on the same day, “Although recent sales have been rapidly declining, limiting profit contributions in the second quarter, a sales rebound is expected with global market expansion within the year.” He added, “In July, the global release of the idle RPG ‘Hero Ball Z’ and the war simulation game ‘Crossfire Warzone’ is scheduled, and in the fourth quarter, the release of ‘Tera Endless War’ is planned, so performance improvement in the second half is possible.”

Joycity’s flagship game, the Freestyle series, has been generating steady sales in China for over 15 years since its release, serving as a stable cash cow. Researcher Oh predicted, “Since last year, large-scale updates have led to a sales rebound of Freestyle in China, which will drive overall sales growth this year.” Online game sales, including the Freestyle series, recorded 9.9 billion KRW in the first quarter, a 22% increase compared to the same period last year, and sales growth of around 20% is expected in the second quarter as well.

War simulation games, which account for 50-60% of sales, are also evaluated to be steadily growing through continuous new releases. Researcher Oh said, “‘Pirates of the Caribbean’ has maintained quarterly sales in the 10 billion KRW range since last year, and the sales of ‘Gunship Warfare,’ released at the end of 2018, are rapidly growing, driving overall war simulation sales growth.” He added, “In the second half, new war simulation games based on the Crossfire and Tera intellectual properties (IP) are scheduled for release, so the growth trend is expected to continue.”

It is explained that valuation reappraisal is possible if the new titles succeed. In the first quarter, Joycity recorded sales of 29.3 billion KRW and operating profit of 5 billion KRW. Researcher Oh forecasted, “In the second quarter, sales are expected to increase to over 40 billion KRW due to growth in war simulation sales and the release of Bless M.” He continued, “With steady growth in existing titles’ sales and three new titles scheduled for release in the second half, achieving the company’s sales guidance of 140 billion KRW for this year should not be difficult.” If the new titles succeed, Joycity’s valuation, currently at a price-to-earnings ratio (PER) of 16 based on consensus, could also be reappraised.

This content was produced with the assistance of AI translation services.