[Into the Stocks] Com2uS, New Releases Over Earnings?

[Asia Economy Reporter Song Hwajeong] Com2uS is building anticipation ahead of the launch of its global highly anticipated title, "Summoners War: Hundred Years' War" (hereinafter referred to as Hundred Years' War). Although the first-quarter earnings are expected to be sluggish, if the new release succeeds at the box office, future earnings improvements are also expected to follow.

According to the Korea Exchange on the 27th, Com2uS has risen more than 28% from the yearly low recorded in early last month. Since hitting the yearly low on the 9th of last month, the stock has risen for 15 consecutive trading days, quickly reaching the 170,000 KRW range, and during the previous trading session, it climbed to 180,600 KRW intraday, marking a 52-week high. Attention is focused on whether it will surpass the previous high of 191,500 KRW recorded in 2018 and the all-time high of 191,583 KRW set in 2015. This is also why all eyes are on Hundred Years' War, which is just two days away from release.

Will the Release of Hundred Years' War Propel a New High?

Com2uS will simultaneously launch Hundred Years' War in 174 countries worldwide on the 29th. Hundred Years' War is a real-time strategy battle game developed based on the intellectual property (IP) of Com2uS's global flagship title, Summoners War. With over 6 million global pre-registrations, it is considered the biggest anticipated title of the year.

Given its global anticipation, extensive pre-marketing was conducted. Com2uS held a pre-launch event called the "World 100 Invitational" on the 24th. This event was attended by 100 influencers and celebrities from around the world, including Korea. In Korea, famous influencers such as Gamst Crew and Pungwollang, former professional gamers like Hong Jin-ho and Moon Ho-jun, Super Junior's Eunhyuk, and comedian Lee Jin-ho participated. Additionally, well-known influencers from North America, Europe, and Asia also joined. The total number of subscribers across all participants' channels exceeded 75 million, making it an exceptionally large-scale pre-launch event.

Researcher Ahn Jaemin from NH Investment & Securities said, "The pre-registration response is favorable, and the global traffic for the existing Summoners War title remains strong, which is expected to have a positive effect on initial user acquisition." He added, "Compared to the previous Summoners War, real-time battles have been enhanced, and since it inherits the Summoners War universe, users who enjoyed Summoners War are likely to naturally migrate."

Researcher Kim Donghee from Meritz Securities estimated, "The revenue for Hundred Years' War this year is expected to be 129.4 billion KRW, with a daily average of 540 million KRW," adding, "Considering the Summoners War IP royalties and global pre-launch response, this is a sufficiently achievable level."

Researcher Lee Dongryul from KB Securities said, "If Summoners War recorded 800,000 daily active users (DAU) and an average revenue per daily active user (ARPDAU) of about 1,300 KRW last year, Hundred Years' War aims for over 1 million DAU this year." He explained, "The focus is more on battles than character development, making it more casual compared to Summoners War. However, since the simplified character development method revealed in the closed beta test (CBT) highlighted pay-to-win (P2W) tendencies, initial revenue is also expected to be promising."

Strengthening Competitiveness through Aggressive M&A

In addition to new releases, Com2uS is also strengthening its competitiveness through aggressive mergers and acquisitions (M&A). On this day, Com2uS announced that it invested approximately 20 billion KRW to acquire a 30% stake in MediaCan, a comprehensive media content company.

MediaCan is a comprehensive media group with integrated expertise in video business areas such as broadcasting services and content production. It has built business capabilities in the legacy media sector through channel transmission services for over 60 PP companies, the largest scale in Korea, and operation of numerous cable channels. Particularly, its subsidiary, Plady, produces diverse content such as web dramas, web entertainment, and web documentaries based on rich planning capabilities, and holds numerous original content IPs optimized for recent digital environments like broadcasting, online video services (OTT), and signage. Com2uS plans to globalize various IPs owned by MediaCan and its subsidiaries, explore cooperation plans to convert Com2uS game IPs into digital content, and expand overseas markets.

Researcher Lee Mina from Daishin Securities explained, "Recently, Com2uS has been actively diversifying its business. Beyond various game company M&As such as acquiring German game company OOPT, 57% stake in 'Kritika' developer Allm, and 15% stake in Devsisters, it is expanding investments in various companies including webtoon and web novel producer MStoryHub and visual effects specialist Wizwick Studio."

Sluggish Earnings Pose a Burden

Sluggish earnings remain a burden. According to financial information provider FnGuide, Com2uS's consensus forecast for the first quarter of this year is 129.3 billion KRW in sales and 24.8 billion KRW in operating profit. This represents increases of 31.54% and 5.08%, respectively, compared to the same period last year. However, most securities firms expect Com2uS's first-quarter earnings to fall short of consensus and be sluggish. Daishin Securities forecasts a 10.1% decrease in operating profit to 21.3 billion KRW, NH Investment & Securities expects a 17.6% decrease to 19.5 billion KRW, Korea Investment & Securities projects a 4.6% decrease to 22.6 billion KRW, Meritz Securities anticipates an 11.3% decrease to 21.0 billion KRW, and KB Securities predicts a 23.3% drop to 18.1 billion KRW. Researcher Jung Hoyoon from Korea Investment & Securities analyzed, "The seasonal effect of the fourth quarter was removed, and there were no events, so Summoners War's sales decreased compared to the previous quarter, and there was no new release to offset this. Additionally, labor costs increased due to an 8 million KRW salary raise for employees, and marketing expenses rose significantly due to Hundred Years' War marketing campaigns."

However, the stock price is expected to move more according to the new release than earnings. Researcher Ahn said, "If favorable results appear after the release of Hundred Years' War, expectations for earnings growth and global success will positively impact the stock price." Researcher Jung added, "Based on our estimates, the forward price-to-earnings ratio (PER) for 2021 is 13 times, which is low compared to other game companies. If Hundred Years' War succeeds at the box office and diversifies revenue sources, profit growth and valuation rerating (corporate value reassessment) are likely to occur simultaneously."

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