[Click eStock] "Joycity, Resuming Marketing Will Soon Lead to Growth"

Operating Profit in Q3 This Year Down 26.7% YoY
Heungkuk Securities Lowers Joycity Target Price from 17,000 Won to 16,000 Won

[Asia Economy Reporter Gong Byung-sun] Joycity showed earnings below the market consensus for the third quarter of this year, along with a decline in revenue from major games. However, the resumption of marketing for key games and new releases are expected to drive growth.

According to Heungkuk Securities on the 2nd, Joycity's sales for the third quarter of this year recorded 47.5 billion KRW, an increase of 4.37% compared to the same period last year, while operating profit decreased by 26.7% to 4.1 billion KRW. The operating profit was 44.59% below the consensus of 7.4 billion KRW.

The poor sales performance of major games led to these results. In the third quarter, PC sales of the ‘Freestyle’ series declined due to the off-season effect. Additionally, mobile sales of ‘Kaeribian-ui Haemjeok’ (Pirates of the Caribbean) also decreased. Although Kaeribian-ui Haemjeok showed growth by recording its highest-ever sales in the first half of this year, sales declined as marketing expenses were reduced.

Researcher Kang Seok-ho of Heungkuk Securities explained, “Despite increased marketing expenses for ‘Gunship Battle’ through a contract with the global game distributor Tilting Point, overall company marketing expenses in the third quarter decreased by 15% compared to the previous quarter,” adding, “It is interpreted that a gap occurred in preparation for marketing restructuring in terms of return on advertising spend (ROAS).”

Accordingly, Heungkuk Securities maintained a ‘Buy’ investment opinion on Joycity but lowered the target price from 17,000 KRW to 16,000 KRW. The closing price on the previous day was 12,100 KRW.

(Provided by Heungkuk Securities)

However, Heungkuk Securities expects growth to recover if marketing is resumed. This is because Gunship Battle, which is actively marketing, continues to grow compared to the previous quarter. Researcher Kang said, “If a point comes when growth does not appear despite marketing efforts, questions about marketing capabilities or product life cycle may arise,” adding, “Currently, it is not the time to raise such concerns.”

New releases are also expected to contribute to growth in the future. The new title ‘Project M’ is expected to be released in the first quarter of next year, and considering the release timing, the publishing contract seems to be imminent. Additionally, new titles such as ‘Disney Knight Saga’ and ‘King of Fighters’ are also scheduled for release.

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