The Korea Herald


[Market Now] WeMade downgraded on lackluster games

By 박형기

Published : April 4, 2016 - 14:14

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WeMade Entertainment, a KOSDAQ-listed game developer and publisher, once made a name for itself with hit titles such as “Wind Runner” and “Legend of Mir” in both PC and mobile gaming.

The company even garnered attention from the market for its investment in Kakao, Korea’s most used mobile messenger, for a strategic partnership in mobile games. WeMade has a 4 percent stake in Kakao, and holds equities in notable game companies including 4:33 and Joymax.

However, currently with hardly any blockbuster games on mobile platforms and the company earnings much below the market consensus, analysts are advising investors to “hold” WeMade shares  -- a downgrade from a “buy” recommendation.

“Sales growth will likely slow in the absence of new games in its lineup,” said Joshua Kong, an analyst at Shinhan Investment.
WeMade’s “Soul & Stone” (WeMade) WeMade’s “Soul & Stone” (WeMade)

The company released numerous games early this year -- “Soul & Stone,” “Hero Stone” by Joymax, “Field of Fire” and “Legend of Sabac” -- but they were unable to attract huge attention as hoped.

“Soul & Stone” is estimated to post daily sales of between 10 million won ($7,600) and 20 million won, but given its marketing and development costs, Kong said the game is “seen as a failure.”

Also, “Legend of Sabac,” which is based on “Legend of Mir 2,” did not live up to its hype.

Analysts forecast its operating profit in the first quarter of this year to reach 1.9 billion won, a 134 percent decrease from a year ago, on sales of 33.3 billion won, falling short of the market consensus at 4.8 billion won operating profit surveyed by Bloomberg, Mirae Asset Securities said.

“We expect its operating profit to be lower than market expectations as it had no hit games in the first half of this year,” said Jeong Yong-jei, analyst at Mirae Asset Securities.

Like Kong, Jeong advised investors to “hold” WeMade shares, with its target value estimated at 33,000 won per share.

WeMade is expected to release “Gaia” and “Changchun 2” in the latter half of this year.

By Park Hyong-ki (