Mirae Asset Securities said on the 12th that although SHIFT UP's operating profit was weak in the first quarter, expectations for a new title would gradually build in the second half. It maintained a Buy rating and a target price of 48,000 won. SHIFT UP's previous closing price was 31,400 won.
SHIFT UP posted first-quarter revenue of 47.3 billion won, up 12% from a year earlier, and operating profit of 21.5 billion won, down 18%. Revenue matched the consensus (market average forecast), but operating profit fell 13% short of the consensus.
Revenue from the flagship game "Nikke" rose 1% on-year to 32.7 billion won, which was 13% below expectations. Lim Hee-seok, an analyst at Mirae Asset Securities, said, "Nikke's global weakness stems from the underwhelming impact of the New Year update."
"Stellar Blade" revenue grew 84% on-year to 12.9 billion won. That was 7% below expectations. Despite weak revenue due to promotions, sales volume was solid, according to analyses. Labor costs, reflecting a one-off incentive, rose 65% on-year to 16.2 billion won.
Mirae Asset Securities projected that global revenue for the key title Nikke would achieve a turnaround in growth in the second quarter.
Lim said, "With the recently conducted 3.5-year anniversary update proceeding successfully, Nikke Global ranked No. 1 in revenue in the two major app markets in key countries including Korea and Japan," adding, "Since April, revenue is estimated to have increased by more than 30% from a year earlier."
In the second half, details on the next title are also expected to take shape. SHIFT UP has said it plans to handle publishing directly starting with titles after Stellar Blade.
Lim said, "This year's forward price-earnings ratio (PER) is 15.7 times, so valuation pressure is not high, and it is positive that a growth turnaround for Nikke Global is expected from the second quarter," but added, "However, with major intellectual property (IP) platform and regional expansion largely completed and the initial post-launch revenue effect also removed, it is true that short-term momentum is lacking."