[Click eStock] "NetGames, Profit Growth Expected with New Releases Including 'Blue Archive'"

Cape Investment & Securities Report

[Asia Economy Reporter Minji Lee] Cape Investment & Securities expressed on the 5th that NetGames can enter a high profit growth phase through stable sales of existing games as well as new game releases.

This year, NetGames' sales are expected to reach 134.6 billion KRW, and operating profit is expected to grow by 51% and 135%, respectively, compared to the same period last year. Jinseong Choi, a researcher at Cape Investment & Securities, said, “The stable growth of the existing game V4 and the scheduled release of new titles ‘Blue Archive’ and ‘Hit MMORPG’ are expected,” adding, “As a specialized developer covering fixed costs, high profit growth is anticipated.”

The existing game V4 has been showing steady performance since its release in November 2019, ranking 7th in domestic Google Play sales. The company is expected to achieve an operating profit of 29.4 billion KRW from V4 as a single game last year, and steady results are expected this year as well.

This year’s new releases are ‘Blue Archive’ and the ‘Hit MMORPG’ scheduled for release in the second half of the year. Pre-registration for Blue Archive began yesterday in Japan; this game is a bishoujo character collection RPG developed by NetGames and published by Yostar.

Yostar is a specialized publisher in the subculture genre, focusing on publishing niche games such as ‘Epic Seven’ in 2019 and ‘Arknights’ last year. Since their releases, both games have ranked within the top 10 in both markets. Researcher Choi explained, “The first quarter daily sales of Blue Archive are expected to be 550 million KRW,” and added, “If it achieves similar results to Yostar’s previous games, an additional increase of about 36-40% is expected.”

He further stated, “Based on this year’s profit estimates, the current market capitalization corresponds to a PER of 6.2 times, indicating an excessively undervalued range.”