[Click e-Stock] "DoubleU Games Secures Additional Growth Momentum with Wow Games Acquisition"

Target Price Raised from 64,000 Won to 70,000 Won

On July 10, Hana Securities raised its target price for DoubleU Games from 64,000 won to 70,000 won, stating that the acquisition of Wow Games has provided the company with additional growth momentum. The investment opinion was maintained at 'Buy.'

Previously, DoubleU Games announced on the previous day that it would acquire German social casino company Wow Games for up to 104.4 billion won (65 million euros). Wow Games is ranked among the top 10 companies in the European social casino market and recorded sales of 67.2 billion won last year. Its operating profit margin (OPM) is in the mid-20% range.

Lee Junho, a researcher at Hana Securities, commented, "With this acquisition, DoubleU Games is aiming to expand its revenue in the European market, in addition to its existing strength in the United States. As payment amounts in the existing social casino segment have been declining year-on-year, this deal allows the company to defend its current business while simultaneously securing growth momentum in the European market."

DoubleU Games' consolidated sales for the second quarter were 174.5 billion won (up 6.9% year-on-year), with an operating profit of 57.6 billion won (down 14.2%), meaning operating profit is expected to slightly fall short of market expectations. Although payment amounts grew across all segments compared to the previous quarter, the fact that most revenue is generated overseas means that the decline in the won-dollar exchange rate is acting as a headwind.

Lee also pointed out, "If the exchange rate continues to fall, it is likely to mask the high base of payment growth. To overcome this, continuous mergers and acquisitions (M&A) focused on social casino, iGaming, and casual segments are necessary." Despite the acquisition of Wow Games and a share buyback of 35 billion won announced the previous day, DoubleU Games is estimated to still have more than 700 billion won in cash reserves. Upon completion of the share buyback, 1-2% of shares will be retired in line with the shareholder return policy.