[Click eStock] Shift Up's China Expectations for "Nikke" Already Priced In, Needs New Title Success

Outstanding Performance Needed in China to Exceed Expectations
Limited Anticipation for Stellar Blade's Steam Release

There is an analysis that the off-season impact of Shift Up's flagship title "Nikke" and the fading effect of the launch of "Stellar Blade" have affected the company's performance. There are also concerns that, since expectations for the game's release in China have already been factored in, the stock price could decline if actual results fail to meet those expectations.

On the 13th, Daishin Securities lowered its target price for Shift Up by 8.8% to 73,000 won, citing these factors. The previous day's closing price was 54,600 won. The investment opinion of "Buy" was maintained. Daishin Securities explained that after Shift Up posted solid first-quarter results, "Nikke" entered its off-season and the launch effect of "Stellar Blade" dissipated.

In the first quarter of this year, Shift Up recorded sales of 42.2 billion won and operating profit of 26.3 billion won. These figures represent increases of 13% and 1%, respectively, compared to the same period last year, and were in line with market consensus.

Sales from "Nikke" amounted to 32.3 billion won, which is a decrease of about 11% compared to the same period last year. Despite the Evangelion collaboration update in February, sales declined due to the off-season effect. "Stellar Blade" sales were 7 billion won, down 64% from the previous quarter. The launch effect faded, and sales volume decreased ahead of the Steam version release. Labor costs were similar to the previous quarter at 9.8 billion won.

The future success of "Nikke" in China is crucial. Over the approximately four months since pre-registration began in China, more than 8 million users have signed up. Since the full-scale marketing campaign at the end of March, the number of pre-registrations has steadily increased, surpassing the company's targets. Daishin Securities estimated "Nikke"'s average daily sales at about 800 million won.

The expected sales volume of "Stellar Blade," which is scheduled for release on Steam next month, has been lowered from 2.4 million units to 1.5 million units. Considering that PlayStation 5 exclusive titles have not surpassed PS5 sales after being released on Steam, it is analyzed that the impact of new title expectations on the stock price will be limited.

Lee Jieun, a researcher at Daishin Securities, explained, "Even if positive sales rankings are confirmed immediately after launch, if the game fails to maintain box office results that exceed market expectations, the subsequent gap in new releases and a burdensome valuation compared to competitors will become more pronounced."