[Click eStock] "Neowiz 2Q Mostly Weak... Hope Lies in 'Bless'"

Operating Profit Halved Compared to Consensus
Bless Unleashed Is Key... Hits Big Right After Launch on PC Platform Steam

[Asia Economy Reporter Minwoo Lee] Due to an overall decline in game sales, Neowiz posted earnings below market consensus for the second quarter of this year. However, with the recently released "Bless Unleashed" gaining strong popularity, a rebound is expected from the third quarter onward.

On the 13th, Samsung Securities maintained a "Buy" rating on Neowiz and raised the target price by 42.4% to 47,000 KRW. The closing price the previous day was 39,900 KRW.

Neowiz's second-quarter performance this year was somewhat sluggish. Sales reached 58.9 billion KRW and operating profit was 5.2 billion KRW, down 18.48% and 70.62% respectively compared to the same period last year. Operating profit was 55.30% below market expectations. Samsung Securities analyst Donghoon Oh explained, "Sales of web board games, Japan GameOn, and domestic and overseas mobile games all declined significantly overall. Due to the decrease in sales and increased pre-marketing costs for 'Bless Unleashed,' operating profit also dropped sharply."

Sales of web board games decreased by about 12% compared to the previous quarter. This is attributed to the restructuring of web board games following the strengthened review standards by the Game Rating and Administration Committee. Although the poor sales of web board games are expected to continue through the third quarter, there is potential for a sales rebound as regulations may be eased again through the sunset clause in February next year.

The key factor is "Bless Unleashed," which was released on the PC game platform "Steam" on the 7th. Since its launch, it recorded 70,000 concurrent users, ranking 8th in terms of user numbers on Steam. This better-than-expected success signals a positive outlook for third-quarter earnings improvement. Analyst Oh stated, "Considering the tendency for package sales to concentrate in the early stages on the Steam platform, sustained future sales will be the key to Neowiz's earnings improvement. Samsung Securities expects an additional 19 billion KRW in sales from the PC version of Bless Unleashed in the third quarter."