NCsoft`s new mobile title, Lineage M , has suffered from some initial hiccups. During market hours yesterday (June 20th), NCsoft announced its plan to officially launch Lineage M without an integrated exchange platform, which led to a drop in the shares. In addition, the sharp increase in the number of players upon the launch of the game has resulted in shutdowns of several servers, exposing the firm to operational risks.
On the first day of its release, Lineage M emerged as the top-grossing game app in Apple`s App Store. We will also check the revenue performance in Google`s app store (which is updated relatively late) soon. Of note, the company plans to add an itemexchange function to Lineage M before July 5th. We believe the item-exchange function will play a more important role than early-stage revenue in how long the game will run. As for server operation, we believe that NCsoft will gradually improve the stability of its servers, in light of its 20-year experience of operating MMORPG games.
We expect the stock to maintain strong momentum after the launch of Lineage M on the back of: 1) the expected inclusion of an item-exchange platform in the game; 2) the announcement of an overseas publishing schedule; and 3) the potential introduction of new games, like the mobile version of Blade & Soul , within this year. We maintain our Buy call and target price of W500,000 on NCsoft.
By Moon Jee-hyun, Analyst at Mirae Asset Daewoo Securities
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