[Click eStock] "Com2uS, Weak in Q1, Hopes for H2... Target Price ↓"

[Asia Economy Reporter Lee Myunghwan] IBK Investment & Securities announced on the 18th that it maintains a buy rating on Com2uS but lowers the target price from the previous 200,000 KRW to 110,000 KRW. This is due to the company's first-quarter earnings falling short of market expectations and the recent crash of Terra-Luna making delays in blockchain new business inevitable.

Com2uS's first-quarter revenue this year increased by 14.3% year-on-year to 133.3 billion KRW, but operating loss turned to 2.7 billion KRW compared to a profit in the same period last year. The operating profit significantly missed market expectations, reflecting poor performance. The top line grew year-on-year as the flagship title "Summoners War: Sky Arena" remained steady and subsidiary Wysiwyg Studios' revenue was consolidated. However, compared to the previous quarter, revenue declined due to the removal of the game and media peak season effect from the fourth quarter of last year.

Operating loss was due to increased labor costs and higher media business cost ratios. The gaming business posted an operating profit of 8.4 billion KRW, but the media segment recorded a loss of 11.1 billion KRW. However, IBK Securities noted that in the second quarter, the 8th anniversary event of "Summoners War" is believed to have achieved the highest daily sales ever. Com2uS Pro Baseball also performed well, contributing to overall top-line growth.

IBK Securities' analysis expects strong domestic and overseas performance from the second half's new release, "Summoners War: Chronicle." Com2uS recently conducted beta testing of this game in Southeast Asia and plans to launch it domestically in July. Especially, with the global market release of a version combined with P2E (Play to Earn) in the fourth quarter, growth is anticipated. IBK Securities analyzed that Com2uS is preparing eight blockchain games internally and three through publishing.

IBK Securities analyzed that delays in new business are inevitable due to the recent crash of cryptocurrencies Terra and Luna. Com2uS's cryptocurrency "C2X" initially used Terra as its mainnet. Following the price collapse of Terra and Luna, C2X announced on the 13th that it would switch to a different mainnet.

However, this negative factor is already reflected in the stock price, according to analysis. IBK Securities researcher Lee Seunghoon explained, "While profitability deteriorated during the pursuit of new businesses such as metaverse, blockchain, and P2E, expectations for these new businesses have risen. Since the earnings and Terra-related negative factors are already priced in and there is momentum from new game releases, we maintain a buy rating."