August 20, 2010 Korea – Equity Research Chang Kwean Kim +822-768-4321
[email protected] Jee-Hyun Moon +822-768-3615
[email protected] NCsoft (036570 KS/Buy) 2011F Earnings to benefit from Guild Wars 2 Demonstration of Guild Wars 2 and Aion 2.0 at GamesCom, which opened in Germany on August 18 Expect commercial launch of Guild Wars 2 during summer 2011 Guild Wars 2 should outperform Guild Wars 1 with cumulative CD sales topping 6.5mn copies globally Maintain Buy on NCsoft with target price of W280,000 Demonstration of Guild Wars 2 to boost shares NCsoft demonstrated Guild Wars 2 at GamesCom, a European trade fair for interactive games, which opened in Germany on August 18. We believe that the demonstration of Guild Wars 2 has eased concerns about delays, one of the biggest risks associated with investment in game companies. We forecast the company to commercially launch the MMORPG game in summer 2011, given that: 1) the game was confirmed to be highly sophisticated at GamesCom; and 2) Blizzard’s real-time strategy game Starcraft II, which had been delayed, was commercialized in July 2010, one year after its demonstration at the largest American game conference PAX in September 2009. We expect Guild Wars 2 to outperform Guild Wars 1 with cumulative CD sales topping 6.5mn copies globally, as: 1) The company added new features (e.g. level-up – preferred by Asian players), while maintaining the strengths of the original game, including PvP (multiplayer interactive feature that enables gamers to play against other live participants), which proved to be popular with North American and European players.