[Click eStock] "JoyCity Transitions to Blockchain Game Company"

Q4 Sales and Operating Profit Expected to Fall Short of Consensus by 10% and 13%
Heungkuk Securities "Joycity Target Price Raised from 10,667 Won to 11,000 Won"

[Asia Economy Reporter Gong Byung-sun] Joycity's fourth-quarter results for last year are expected to fall short of market consensus. However, Heungkuk Securities analyzes that the company has secured growth momentum by transitioning into a blockchain game company.

On the 25th, Heungkuk Securities estimated Joycity's fourth-quarter revenue for last year at 47.2 billion KRW, a 0.9% decrease compared to the same period last year, and operating profit at 4.5 billion KRW, down 17.4% year-on-year. These figures are 10% and 13% below the respective consensus estimates.

Costs occurred in several areas. Although the revenue of 'Freestyle' rebounded compared to the previous quarter, marketing expenses were not controlled, leading to a decline in revenue from the strategy simulation genre. Additionally, asset impairments related to 'Bless Mobile' and 'Crossfire: Warzone' caused a non-operating loss of 4.8 billion KRW.

However, it is expected to show growth accompanied by high efficiency as a blockchain game company. 'Gunship Battle,' which has set quarterly record-high revenues for three consecutive years, is scheduled to onboard onto the WEMIX platform in the first quarter of this year. Onboarding refers to the process of settling on the platform. If the WEMIX onboarding proceeds smoothly, it is anticipated that Joycity will be able to reach WEMIX platform users with relatively low marketing costs.

Existing and new games are also expected to be released in the form of blockchain games. Kang Seok-oh, a researcher at Heungkuk Securities, explained, "Joycity already operates games such as Freestyle and Hero Ball Z and holds numerous intellectual properties (IPs), enabling a rapid response to the blockchain game market," adding, "The new IP 'Project M' is also expected to be released in the first half of this year."

Accordingly, Heungkuk Securities maintained its 'Buy' investment rating on Joycity and raised the target price from 10,667 KRW to 11,000 KRW. The closing price on the previous day was 8,200 KRW.