NICE Investors Service Downgrades Credit Ratings of Com2uS and Com2uS Holdings

NICE Investors Service has simultaneously downgraded the long-term credit rating of Com2uS and the short-term credit rating of Com2uS Holdings.

In its regular evaluation released on the afternoon of June 17, NICE Investors Service downgraded Com2uS's long-term credit rating from 'A/Negative' to 'A-/Stable.' The short-term credit rating of Com2uS Holdings was also lowered from 'A3+' to 'A3.'

First, NICE Investors Service cited the continued weak operating performance due to declining revenue from flagship IPs and increased cost burdens associated with new releases as the background for the rating adjustment for Com2uS. Summoners War, Com2uS's main IP, accounts for 40 to 50 percent of the company's game segment revenue.

NICE Investors Service also pointed out that although Com2uS is attempting to reduce its reliance on a single IP by pursuing publishing operations alongside in-house development and launching a variety of new titles, the contribution to profitability remains limited due to marketing expenses and royalties. Furthermore, even if new titles are released, it will take time before there is any meaningful improvement in performance.

Additionally, the agency identified the deterioration of profitability and financial stability resulting from restructuring and impairment losses in the media and content segments as another reason for the downgrade. NICE Investors Service stated, "Structural factors undermining profitability in the content industry, such as rising production costs, are expected to persist, and the company's consolidated profitability will remain at a lower level compared to before 2021 in the medium to long term." The agency also added, "Given the weakened operating cash flow and non-recurring CAPEX and equity investments, the potential for cash flow improvement is limited in the short to medium term."

For Com2uS Holdings, delayed profitability recovery and weakened financial stability due to increased investment losses in affiliates, including Com2uS, were also cited as reasons for the rating adjustment.

NICE Investors Service commented, "Despite a shift in publishing strategy, there has been no meaningful recovery in profitability." The agency continued, "Global launches of 'Spirit Tales' (formerly Manling Story) and 'Zenonia: Chrono Break' are scheduled for this year, but intensified competition in the mobile gaming market has heightened uncertainty over their commercial success, limiting the potential for performance improvement."

The agency further stated, "Com2uS Holdings expanded into the blockchain sector by acquiring shares in the virtual asset exchange Coinone in 2021 and 2022, but following the Terra-Luna incident, the market downturn led to reduced profitability at Coinone and investment losses from affiliates between 2022 and 2024." The agency also noted, "Com2uS, a key affiliate, continued to post operating losses through 2023," highlighting financial stability concerns due to increased investment losses in affiliates. NICE Investors Service concluded, "Given the low level of operating profitability and cash generation, it will take time to improve the company's financial structure."