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The author is an analyst of NH Investment & Securities. He can be reached at jaemin.ahn@nhqv.com. — Ed. 

Building on the back-to-back success of games Odin and Umamusume, we expect Kakao Games’ top-line momentum to gather further force, spurred by a number of new titles set for release in 2H22.

New title Umamusume delivering strong sales; expect further earnings growth in 2H22

– We maintain a Buy rating and a TP of W75,000 on Kakao Games. Following on the heels of the success of Odin in 2021, new title Umamusume is delivering healthy sales, evidencing the influence of Kakao Games both as a developer and as a publisher. With new line-ups (invested so far) to be introduced through 2023, we expect the firm’s top-line momentum to gather further force.

– Umamusume has stood atop Google App Store’s sales rankings since its launch in June. With the game defending its first-place sales standing since an update on Jul 25, Kakao Games should enjoy significant top-line expansion this quarter. We boost our 3Q22 sales estimate for Umamusume from W76.1bn (W840mn per day) to W81.9bn (W910mn per day). Noting that the company recorded W15.0bn in daily sales after the last update (the addition of Kitasan Black character), we view our upgraded estimate as being fully achievable.

– With Kakao Games planning to roll out a number of new titles (XLGames New Title (MMORPG), Disterra (FPS), Eversoul (RPG), Ares: Rise of Guardians (MMORPG)) through 1H23, its future sales growth is to hinge upon sales performance for these games. Should these new titles prove successful, the currently high sales dependency on Odin should lessen, in turn easing concerns towards an IPO for subsidiary LionHeart Studio.

– Further positive, Kakao Games’ 2Q22 results release shows that sales are upping at subsidiaries Kakao VX (screen golf) and Sena Technology (wearable device), and its non-game sales are also on the rise.

2Q22 review: OP tops expectations

– Kakao Games registered consolidated 2Q22 sales of W338.8bn 

(+161.7% y-y, +27.2% q-q) and OP of W81.0bn (+900.2% y-y, +92.5% q-q), with OP exceeding both our estimate of W77.1bn and consensus of W78.4bn. A full 90-day sales of Odin in Taiwan were reflected, and sales for new hit title Umamusume were also partially reflected. With Umamusume maintaining its number-one gross sales ranking status at Google Playstore since the recent Kitasan Black update, it should make visibly strong contributions to overall sales in 3Q22.


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