The Korea Herald


[Kosdaq Star] New MMORPG heralds Gamevil’s Q4 earnings surprise

By Son Ji-hyoung

Published : Oct. 21, 2018 - 16:21

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This is the 62nd in a series of articles analyzing major companies traded on the tech-heavy Kosdaq market. -- Ed.

There is growing anticipation for a turnaround in at Gamevil, a developer and publisher of mobile games, after the global market reacted positively to its recent releases and news of releases slated for the fourth quarter.

On Friday, Gamevil’s stock price jumped sharply, closing 14.9 percent up from Thursday. Its market cap came to 361.4 billion won ($319.2 million), ranking 121st in size among the 1,300 companies listed on Kosdaq. The uptick Friday was driven by a net purchase of shares worth 2.7 billion won by foreign investors and 1.4 billion won by retail investors.

A screenshot of “Vendetta,” a Japanese adaptation of Gamevil’s “Talion” (Gamevil) A screenshot of “Vendetta,” a Japanese adaptation of Gamevil’s “Talion” (Gamevil)

Before its rebound Friday, Gamevil was no exception to downtrend that has recently swept the entire second-tier Kosdaq market. The Kosdaq index retreated 12 percent over the 20 trading days ending Thursday. Gamevil’s stocks moved in line with that, taking a 10.8 percent loss over the period.

Gamevil’s sluggish first-half performance in 2018 was attributable to poor performance this year. Gamevil logged an operating loss worth 9.9 billion won in the first half of 2018, while its net income shrank 42.8 percent to record 5.1 billion won.

Peaking at 95,000 won per share in the first trading day of 2018, the stock price slid sharply by over 30 percent in nine trading days. Since then, the share price had slumped to a 52-week low at 42,200 won as of Tuesday.

At this point, analysts said a new blockbuster release of “Talion” would be the turning point for the company. First launched in Southeast Asia in September, it is a three-dimensional massively multiplayer online role playing game that features various “realm-versus-realm” combat modes between players, including 20 on 20. “Talion” was developed and distributed in partnership with UTPlus Interactive, another Korean game developer. 

A screenshot of “Vendetta,” a Japanese adaptation of Gamevil’s “Talion” (Gamevil) A screenshot of “Vendetta,” a Japanese adaptation of Gamevil’s “Talion” (Gamevil)

On Thursday, “Vendetta,” a Japanese adaptation of “Talion,” was opened for download there, becoming the 12th-highest grossing game in Apple App Store the next day. Prior to the Japanese market penetration, “Talion” peaked at No. 3 and No. 5 in terms of sales in the Apple App Stores of Thailand and the Philippines, respectively.

“‘Talion’ is drawing revenues beyond expectations,” Lee Kyung-il, an analyst at BNK Investment & Securities, wrote in a note to investors. “Growing momentum from new releases will re-rate the valuation to a larger extent.”

Lee estimated Gamevil’s fourth-quarter revenue to stand at 51.1 billion won and the operating profit at 1.3 billion won, well above the consensus of 32.7 billion won income and 600 million won operating loss.

“Talion” eyes a market entry in European and North American countries in the first half of 2019, while the game has yet to be launched in Korea.

The positive market reaction to the new Mmorpg came after a lackluster performance of new games earlier this year, including “Royal Blood,” another Mmorpg targeting overseas market, as well as a role-playing game “Giants War.”

Kim Min-jung, an analyst at Hi Investment & Securities, projected the third quarter operating loss to amount to 2.1 billion won, while seeing a 9.1 percent rise in total income on-year to 27.7 billion won. This was partly due to sluggish income from “Royal Blood” in overseas markets and “Giants War” in the domestic market, as well as a fall of some 30 percent in revenue from Gamevil’s flagship RPG “Dragon Blaze.”

In the fourth quarter, “Talion,” coupled with the new releases including next installments of its flagship mobile sports games such as “NBA Now” and “Baseball Superstars,” will help the company make progress, Kim wrote.

But the prerequisite for a turnaround will be the success of the upcoming release of RPG “Elune,” alongside the popularity of “Talion,” Kim added, rating the company at “hold” in an investors’ note.

Gamevil was founded in 2000 and went public on the Kosdaq in 2009. James Song, the founder and chief executive of Gamevil, owns 30.9 percent of its shares.

Over 60 percent of Gamevil’s total income came from overseas as of end-June, according to a financial statement issued by the company in August.

By Son Ji-hyoung (