[Click eStock] "Nexon Games, Blue Archive's Potential to Hit in China"... Target Price Up

Sangsangin Securities maintained a buy rating on Nexon Games on the 22nd, stating that considering the characteristics of subculture and the projects under development, it can assign the highest valuation among domestic game companies, and raised the target price from 22,000 KRW to 25,000 KRW.

Nexon Games 'Blue Archive' China Pre-registration Related Image

Nexon Games recorded sales of 51.8 billion KRW and operating profit of 12.4 billion KRW in the first quarter of this year. The results slightly exceeded consensus estimates, as PC sales reached 10.5 billion KRW, higher than the expected 8.1 billion KRW, while mobile sales of 41.3 billion KRW matched Sangsangin Securities’ estimate of 39.7 billion KRW.

Choi Seung-ho, a researcher at Sangsangin Securities, said, "The first quarter sales of Blue Archive were already predictable through its number one position in the Japanese market in January, so there was nothing particularly surprising in the first quarter results."

Blue Archive is also highly rated for its potential success in China. Researcher Choi explained, "We have revised the estimated release date from the first quarter of 2024 to the third quarter of this year, raising the global average daily total sales one year after Blue Archive’s release in China from 1.1 billion KRW to 1.4 billion KRW, a 27% increase." He added, "This reflects a faster-than-expected pre-registration schedule and higher-than-expected pre-registration interest indicators," and further noted, "Considering that Princess Connect, which recorded 5 million pre-registrations in China, achieved initial daily sales of 2 billion KRW in China alone, the indicator of 1.9 million pre-registrations just one month after the start of pre-registration without full-scale marketing activities is sufficiently positive."

Blue Archive is a top subculture intellectual property (IP) in Korea and Japan. It is expected to establish itself as a global top IP through its entry into China. Subculture IPs actively expand, making it easy to create added value through fandom formation. Researcher Choi also maintained the view that Nexon Games is the biggest beneficiary of Chinese game approvals.