The author is an analyst of NH Investment & Securities. He can be reached at jaemin.ahn@nhqv.com. — Ed.
Positive momentum is set to continue for Neowiz in the run-up to Lies of P, which has been drawing attention on the global stage. We forecast sales of Lies of P at 2mn copies.
Lies of P being prepared for final stage of marketing
Maintaining a Buy rating, we raise our TP on Neowiz from W50,000 to W63,000. With expectations for Lies of P on the rise, Neowiz’s share price is set to climb on an upsurge of positive momentum throughout 1H23.
Neowiz recently unveiled a new trailer for Lies of P at Fan Fest 2023, held by US game webzine IGN, hinting at an August release. It has been confirmed that Lies of P is well on track for launch, with additional information disclosure and marketing set for the Game Developers Conference (GDC) in March.
In addition to Lies of P, Brown Dust 2 (a sequel to the solidly performing first entry in the Brown Dust lineup) is expected to be released in May or June, and a variety of Sanabi and Cats & Soup IP-based projects are also in the works. We also note that another game based on popular Japanese novel/comic IP titled ‘Is It Wrong to Try to Pick Up Girls in a Dungeon?’ is planned for release in 2024.
In early February, Neowiz sold subsidiary GOP, which was in charge of publishing for GameOn (Japan). As a result, OP should improve by around W3.0bn or more in 2023.
4Q22 review: OP arrives short of expectations
Neowiz posted consolidated 4Q22 sales of W72.8bn (+5.0% y-y, -2.9% q-q) and OP of W0.3bn (-92.8% y-y, -94.4% q-q), with OP missing both our estimate (W1.5bn) and consensus (W1.2bn).
Sales of web-board games declined slightly q-q, weighed upon by high-base effect due to the Chuseok holidays in 3Q22. In addition, the underperformance of new lineups released in 4Q22 resulted in sluggish sales overall. Despite attending the G-Star game exhibition, marketing costs fell 3.3% q-q to W9.8bn. However, labor costs totaled W33.6bn (+5.0% y-y, -2.9% q-q), reflecting incentive payouts at subsidiaries (eg, Fowgames and Hidea).
