[Click eStock] "Gamevil, Subsidiary Com2uS Underperformance Leads to 14% Target Price Cut"

Ebest Investment & Securities Report

[Asia Economy Reporter Minji Lee] Ebest Investment & Securities maintained a buy rating on Gamevil on the 29th but lowered the target price by 14% to 48,000 KRW. This decision was based on the inevitable downward revision of the target price due to the expected sluggish performance of its subsidiary Com2uS.

Gamevil's standalone operating performance in the second quarter (excluding equity method of subsidiary Com2uS) is forecasted to show sales of 26.7 billion KRW and operating profit of 600 million KRW, representing a 16% growth and a turnaround to profit compared to the previous quarter. However, these figures are expected to fall short of the prior forecast of 27.7 billion KRW in sales and 1.2 billion KRW in operating profit. Researcher Seong Jonghwa of Ebest Investment & Securities explained, “Gamevil's value is more than 100% contributed by the value of its subsidiary Com2uS, so if the stock price declines, a downward revision of Gamevil's target price is unavoidable.”

Com2uS's global launch of ‘Summoners War: Chronicle’ at the end of April achieved a big hit, exceeding company and market expectations with daily sales exceeding 1 billion KRW during the first ten days after launch. However, sales in May and June were significantly below market expectations, showing sluggish performance.

Accordingly, Com2uS's second-quarter sales are expected to fall significantly short of market estimates. Due to increased marketing expenses, operating profit is also estimated to be far below previous forecasts. The possibility of delaying the global launch schedule of Chronicle, originally planned for December this year, has increased, further raising concerns about performance. According to Ebest Investment & Securities' estimates, Com2uS's second-quarter sales are expected to be 164.5 billion KRW and operating profit 18.1 billion KRW, which are about 13.6% and 64% lower than previous forecasts, respectively. As earnings forecasts were revised downward, the target price was also lowered by 19% from 205,000 KRW to 166,000 KRW.

Researcher Seong said, “Gamevil's stock price is inevitably influenced by Com2uS's momentum until it creates new momentum through a big hit of its own games. Even if its standalone performance is better or worse than expected without new momentum, the impact on its value will be minimal.”

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