[Click eStock] "JoyCity, Focus on Growth of Main Games"

New Subculture Game Releases Scheduled for Second Half
Webtoon Serialization to Begin in Q4... Anticipating Game Influx from Webtoon Subscribers

[Asia Economy Reporter Gong Byung-sun] Joycity's sales in the second quarter of this year showed strong performance, but net profit sharply declined due to impairment losses. However, securities firms forecast that attention should be paid to the continuous growth of key games such as "Gunship Battle: Total Warfare" (Gunship Battle) and the release of new titles starting in the second half of the year.

According to KB Securities on the 11th, Joycity's second-quarter sales increased by 26% year-on-year to 54.2 billion KRW, and operating profit rose by 38.5% during the same period to 6.2 billion KRW. However, net profit for the period decreased by 97.4% year-on-year to 120 million KRW.

Im Sang-guk, a researcher at KB Securities, explained, "Sales showed strong performance due to the growth of key games, but net profit sharply declined due to impairment losses incurred from the termination of Bless Mobile service."

(Provided by KB Securities)

However, KB Securities focused on the continuous growth of key games in the second half of the year. Joycity's flagship game Gunship Battle is steadily growing, recording monthly sales of about 7 billion KRW. According to a contract signed last December with the U.S. game publisher Tilting Point, which invested approximately 40 million USD (about 46 billion KRW) in marketing, Joycity only needs to pay Tilting Point 7% of net sales after recovering the investment.

Researcher Im said, "After Tilting Point recovers its investment this year, substantial profits will begin next year," adding, "If Gunship Battle succeeds, it could lead to additional contracts for other game titles."

The effect of new releases is also expected. Joycity, which is preparing to release new subculture game titles such as Project M and Project NEO in the second half of this year, is reportedly negotiating contracts with well-known game publishers in China who have competitiveness in the subculture field. Additionally, through its subsidiary Road B Webtoon, Joycity plans to start serializing webtoons from the fourth quarter. This is expected to create a virtuous cycle where webtoon subscribers flow into the games.

KB Securities did not provide an investment opinion or target price for Joycity.