[Exclusive] From 1.5 Trillion to 4 Trillion in Two Months... 'Odin' Developer Raising the Stakes

Lionheart Studio Appears with 4 Trillion KRW Valuation in Old Shares
More Than Double the Value Since Kakao Games' Stake Investment Last November
Odin Slightly Slows, Some View Price as High
Expectations for Valuation Increase with NFT and Metaverse Expansion

[Asia Economy Reporter Minwoo Lee] It has been confirmed that the valuation of Lionheart Studio, the developer of Kakao Games' hit title "Odin: Valhalla Rising," is being discussed at around 4 trillion KRW. This represents more than a twofold increase in just two months compared to when it received equity investment from Kakao Games last November.

According to the investment banking (IB) industry on the 11th, recently 4,000 existing shares of Lionheart Studio appeared on the market. The total amount was about 21.5 billion KRW, with the price per share set at 5.39 million KRW. Considering that the total number of issued shares of Lionheart Studio is approximately 741,600 shares, the company’s valuation was assessed at 4 trillion KRW. When Kakao Games invested last year, the company’s valuation was around 1.5 trillion KRW. At that time, Kakao Games’ subsidiary Kakao Games Europe paid an advance of 450 billion KRW on the condition of acquiring a 30.37% stake in Lionheart Studio.

It is reported that Mirae Asset Venture Investment, Korea Investment Partners, and IMM showed interest in this batch of shares. Lionheart Studio has already proven its performance with "Odin," and attention is focused on its growth path through integration with non-fungible tokens (NFTs) and the metaverse (expanded virtual worlds) in the future.

According to Kakao Games’ Q3 report last year posted on the Financial Supervisory Service’s electronic disclosure system, Lionheart Studio recorded sales of 171.7 billion KRW and net profit of 127.7 billion KRW in Q3 last year. Except for Krafton, which has the largest market capitalization among domestic listed game companies, Lionheart Studio was the only company to achieve over 100 billion KRW in net profit in Q3 last year. Considering that the representative hit "Odin" was released at the end of June last year, this is a performance achieved in about three months. Since Odin still holds the second place in Google Play sales, there are expectations that operating profit could reach the 200 billion KRW range this year.

However, some opinions suggest that this batch of shares is somewhat expensive. There are concerns that Odin’s sales indicators have somewhat slowed down following the release of NCSoft’s Lineage W. An IB industry official said, "If you apply a price-to-earnings ratio (PER) of 30 times to an operating profit of 200 billion KRW, the company’s value would be around 6 trillion KRW," adding, "Buying existing shares at a 4 trillion KRW valuation and deducting various costs may not yield a very high return even after disposal post-IPO."

However, since Kakao Games has announced a strategy called "Beyond Game" to actively pioneer the NFT and metaverse sectors, there is also a forecast that the company’s value could rise further if these areas are integrated with Odin’s intellectual property (IP). As the designated audit aiming for listing has already started since the end of last year, if the growth potential of NFT and metaverse businesses is highlighted at the time of the IPO, the company’s valuation could be amplified. When Krafton went public last year, it set a PER of 43.8 times considering the expansion of content business through IP. Applying this to Lionheart Studio assuming an operating profit of 200 billion KRW would result in a market capitalization of 8.76 trillion KRW.