[KOSDAQ Star] Investors await next cashcow game from Com2us

This is the seventh in a series of articles analyzing major companies by market capitalization traded on the tech-heavy KOSDAQ market. --Ed.

In the highly competitive mobile game industry, the life span of a hit title is getting shorter with new overnight successes emerging everyday. 

Analysts said Com2us, a Korean mobile game developer and publisher, needs to find the next game that can leave the company less reliant on cash-generator “Summoners War” that was launched two years ago.

“Given mobile game’s short life cycle, it’s hard to see ‘Summoners War’ as a stable cash cow although it has maintained popularity so far. The firm won’t be free from downside risks until another hit game,” said Jung Ho-yoon, an analyst at Eugene Investment & Securities.

“Summoners War” is the company’s flagship fantasy role-playing game which has been topping the charts of Google Play and Apple Appstore with over 50 million global downloads.

Although the company has continued to update the hit game, shares in Com2us have struggled to exceed the 150,000-won ($130) level in the past year since it reached its peak of 173,400 won in April 2015.

Its growth has soared during the same period. The company’s first-quarter earnings are widely expected to beat consensus.

Its operating profit in the January-March period is expected to rise 33.8 percent on-year to 52.8 billion won, Samsung Securities said in its report.

Despite its rapid gains, the company’s dependence on “Summoners War” has some worried about its long-term viability, and there are concerns that this could be a repeat of other industry players like Gamevil and Wemade Entertainment which have been unable to create popular titles for years.

Comparing sales of Com2us and Gamevil, which overtook the former in 2013, gives a more clear picture.

In the past three years, while sales of Gamevil have doubled that of Com2us more than quadrupled, although both of them had posted 80 billion won in sales in 2013.

Oh Dong-hwan, Samsung Securities’ analyst, said that he projects sluggish Q1 performance for Gamevil, Wemade and NHN Entertainment due to the absence of new titles and falling sales from aging games while picking Com2us and NCSOFT stocks to buy.

“The polarization of first-quarter earnings in the industry occurred based on whether a company has a cash cow, as profits from a hit can lead to next investment for new game development,” he said.

By Park Han-na (hnpark@heraldcorp.com)