KOSDAQ-listed South Korean game company Com2us is expected to see a significant improvement in its earnings starting the third quarter of this year as the marketing effect of its fantasy fighting game Summoners War would be reflected to its profit and the increasing popularity of Korean baseball games would boost revenue of its Com2us Pro Baseball 2016.

The market consensus has been that the company would record stable but not impressive financial results in the second quarter. Although its flagship Summoners War still contributes much to its earnings by raising more than 100 billion won ($84 million) in revenue, the game failed to attract many new users in April and May, while huge marketing costs undermined its balance sheet.

According to the market data firm FnGuide on Monday, Com2us is projected to post passable operating profit of 56.9 billion won on sales of 137.5 billion won in the second quarter this year, primarily from Summoners War. The on-quarter 62-percent hike in market cost to 26.3 billion won weighed on profitability.

Things will look up from the third quarter, market observers said. “The investment in the marketing and advertising would reap fruits and help profit in the third quarter, while content upgrades will fuel growth,” said Lee Sung-bin from Kyobo Securities Co.

The popularity of its Com2us Pro Baseball 2016 during the baseball season is another factor behind the rosy outlook. The 2016 season of the Korea Baseball Organization (KBO) is estimated to draw a record 8.8 million spectators. “The increasing revenue of Com2us Pro Baseball 2016 offset the weak performance of other games in the January to March period this year. In the latter half of this baseball season, the heated competition would help increase further the revenue of the mobile baseball game,” said Kim Sung-eun from Korea Investment & Securities Co.

The new games in the pipeline will also add to its financial results. It will release two games including 9 Innings 3D and Art Detective in the third quarter and five more in the fourth quarter.

The company has also a potential to see its share price further grow given its lower valuation compared to other game makers. Its price earning ratio (PER) is estimated to be 8.6 this year while that of Sunday Toz Corp. is 10.9 and NC Soft is 18.4. “Generally, a game company that has a blockbuster game such as Summoners War has PER of 10 to 15 on average. So there is great room for the share price for Com2us to surge in the future,” Lee added.

Com2us shares closed Monday at 125,400 won, up 3,300 won or 2.63 percent from the previous session.

By Yoo Tae-yang

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