[Click eStock] "Com2uS, Cost Increase Over New Release Momentum"... Target Price Downgraded

[Asia Economy Reporter Lee Jung-yoon] On the 14th, Samsung Securities downgraded the target price of Com2uS to 150,000 KRW, reflecting a downward revision of profit estimates due to increased expenses such as labor costs. However, the buy rating was maintained.

Com2uS's Q4 revenue last year was 51.9 billion KRW, up 28.5% year-on-year, due to the consolidation effect of subsidiaries such as Wysiwyg Studios. However, sales in the existing gaming segment, excluding the media subsidiary, decreased by 10% compared to the previous year, and operating profit fell 57.2% year-on-year to 11.1 billion KRW due to increased costs related to consolidated subsidiaries and continuous labor cost increases.

Com2uS plans to release nine new P2E (Play to Earn) titles based on its own blockchain platform, C2X. "Summoners War: Hundred Years' War" will be re-released in March this year as a C2X-linked version, and "Summoners War: Chronicle" will first be launched in Q2 as a non-P2E version, followed by a P2E version in the second half of the year. Additionally, Com2uS's metaverse platform, Com2Verse, is scheduled for internal testing in the second half of this year, with plans to commercialize the service for partners in Q2 2023.

However, Samsung Securities forecasted an increase in Com2uS's labor costs this year. Researcher Oh Dong-hwan of Samsung Securities explained, "Due to continuous mergers and acquisitions and rising developer wages, the company's labor costs increased by more than 38% compared to the previous year," adding, "Labor cost increases are expected this year as investments in personnel related to new P2E games and Com2Verse development continue."

He continued, "Reflecting the ongoing trend of rising labor costs and the low profit contribution from the acquired Wysiwyg Studios, we are lowering the 2022 operating profit estimate by 36.7%," adding, "Accordingly, the target price is also adjusted downward by 28.6%, from 210,000 KRW to 150,000 KRW (applying SOTP valuation)."

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