Information Technology / Japan 17 July 2015 Nexon 1 Buy (unchanged) 3659 JP 2 Outperform 3 Hold 4 Underperform Target (JPY): 1,800 2,100 Upside: 19.7% 17 Jul price (JPY): 1,754 5 Sell Korea’s PC café segment as of 14 July. consensus forecasts, to reflect the MapleStory 2: As an internally developed game recent rerating of its global peers. We (hence no royalties required to third- reaffirm our Buy (1) rating on Nexon, a strong boost party developers), MapleStory 2 as we believe it could become the stands to generate significant revenue first company in Korea to capitalise to earnings and high profitability in Korea (from on the huge market opportunities 2H15) and overseas (in 2016). from mobile and online games. Key Thomas Y. Kwon risk to our call: a sharp drop in core- (82) 2 787 9181 Mobile games: too many to fail. game user traffic in Korea and China.
[email protected] In 2Q15, Nexon launched 5 mobile games (including Mabinogi: Dual and ■ How we differ Top of Tanker) in Korea; it plans to We are more positive on: 1) the 2015- • MapleStory 2 hits the market, roll out quality games such as 17E earnings contribution from has unique game features DomiNations in 3Q15. Nexon has mobile games, 2) Nexon’s Korea • New mobile games to start been aggressively taking steps to business, and 3) tax benefits from generating revenue from 2H15 increase its leadership in Korea’s Nexon’s affiliates in Korea. • mobile-game market through large- Reaffirm Buy (1); raise TP to scale promotions and TV Forecast revisions (%) JPY2,100 commercials.