[Click eStock] "Wemade, Expected to Leap in Q4 After Rising in Q3"

Hana Financial Investment Issues 'Buy' Rating and 64,000 KRW Target Price... Closing Price on 12th at 36,200 KRW

Wemade's 'Mir's Legend 2' (Photo by Asia Economy DB)

[Asia Economy Reporter Kum Boryeong] Although Wemade's second-quarter earnings fell short of expectations, an analysis forecasts a leap forward in the second half of the year.

According to Hana Financial Investment on the 13th, Wemade's consolidated second-quarter results showed an operating loss of 3.3 billion KRW and sales of 25.1 billion KRW. Operating profit turned to a loss compared to the previous year, and sales decreased by 26%.

The weaker-than-expected second-quarter performance was due to the removal of the new mobile game effect from the previous quarter and delayed releases of new games impacting license revenue. On the cost side, litigation expenses were temporarily reflected in the first half, and payment commissions also increased significantly.

Future earnings are expected to rise moderately in the third quarter and make a leap in the fourth quarter. Hwang Seungtaek, a researcher at Hana Financial Investment, said, "In the third quarter, sales from 'Samgukji Jehujun' will be fully reflected, and the new title based on the 'Mir' intellectual property (IP) released in China is expected to perform relatively well," adding, "In the fourth quarter, the release of anticipated titles, new licensed games, and contract renewals will continue, showing remarkable growth."

Researcher Hwang maintained a positive outlook, citing three reasons for Wemade's fundamental improvement after the second half of the year. He explained, "By winning the lawsuit against Shanda, the copyright for 'Mir 2' has become clear, and formal contracts with major sublicensed games currently serviced in China are gradually progressing, which is expected to increase license revenue," and added, "The launch of 'Jeongi Store,' a dedicated Mir IP platform in China, will also accelerate."

Furthermore, Hwang said, "With the fundamental issues resolved following the lawsuit outcome against Shanda, news related to the resolution of disputes with major game companies such as Kingnet and the final judgment with 37Games, as well as the receipt of damages, is expected to improve investor sentiment," and emphasized, "Expectations for new games cannot be overlooked. Considering the sales scale of 'Mir 4,' 'Star Wars: Starfighter Mission,' and 'Abyssrium World' released by the headquarters and subsidiaries after the third quarter, it is judged that these will serve as a solid stepping stone for Wemade's second-half performance."

Hana Financial Investment gave Wemade a 'Buy' rating with a target price of 64,000 KRW. The closing price on the 12th was 36,200 KRW.

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