[Click eStock] "Joycity, Maximum Operating Profit Expected Due to New Release Effect"

[Asia Economy Reporter Eunmo Koo] Joycity is expected to achieve its highest operating profit due to the benefits of new releases amid the non-face-to-face demand caused by the novel coronavirus disease (COVID-19). Additionally, securing Disney intellectual property (IP) is anticipated to bring benefits to new releases and new content.

Joycity is a company that develops and supplies online and mobile games. It offers various genres of games including the ‘Freestyle Series’ released in 2004, ‘Pirates of the Caribbean: Tides of War,’ and ‘Gunship Battle: Total Warfare.’ As of the first half of this year, overseas sales accounted for about 68.6% of total revenue. ‘Gunship Battle’ and ‘Warship Battle’ have recorded over 100 million cumulative downloads globally.

The benefits of untact (contactless) demand due to COVID-19 are being fully reflected in performance. On the 22nd, KB Securities analyst Sang-guk Ahn stated in a report, “Due to increased game usage time influenced by remote work and social distancing, overseas sales of strategy simulation games have expanded,” and forecasted, “Following the record performance in the second quarter, untact benefits are expected to continue amid the ongoing COVID-19 situation.”

Furthermore, the effect of new releases is expected to be fully reflected in the second half of this year and next year. Analyst Ahn said, “Strategy simulation games based on famous IPs such as Crossfire and Terra are scheduled to be released within this year, and Project M and Girl’s Frontline are set for release early next year,” adding, “Along with stable performance from existing main games like Freestyle, Pirates of the Caribbean, and Gunship Warfare, the reflection of new releases is expected to result in operating profit exceeding 22 billion KRW this year.”

Moreover, securing licenses from Disney and Pixar is expected to bring benefits to future new releases and new content. Analyst Ahn noted, “This is the first mobile game utilizing Disney IP, and all IPs from Disney and Pixar can be used,” and projected, “With verified IP acquisition and the effect of Disney movie releases, performance expansion in the mid-core genre games is anticipated.”

However, risks include the possibility of increased stock price volatility if new releases are delayed and the overhang issue due to convertible bond issuance (6.8% relative to circulating shares).