Colopl (3668): Potential of Dragon Project Not Reflected in Valuations
Undemanding valuations plus the immediate success of the recently released Dragon Project make Colopl now a stock worth investigating further.
Key Points
- Colopl has not had a hit since FY14
- Unless Colopl’s FY15 releases suddenly come good (unlikely) or FY16 sees some big releases, revenues are likely to plateau in 2H FY16 (Sep) and then fall away sharply in FY17.
- Colopl plans to release six games this summer, starting with J.League Punicon Soccer (one of four sports games) and Dragon Project.
- Dragon Project is the first of Colopl’s two RPGs. Launched on Friday June 3, it went straight to the top of the free download app charts over the weekend.
- Despite higher outsourcing and advertising costs, our FY17 OP forecast is significantly higher than current consensus estimates.
- Valuations remain undemanding, even on our conservative scenario.
- The possibility that Dragon Project represents a return to form in terms of game development is not priced in.
- However, the possibility that Dragon Project could be a blockbuster is certainly not priced in.
Colopl is primarily engaged in the provision of services to high-performance mobile phone. Co. provided mobile game applications to the domestic market. Co.'s main offerings are native applications for smartphones, such as "White Cat Project." In overseas, Co. distributes mobile game services on its own/or works with overseas local distribution partners. Co. also provides services for Virtual Reality ("VR") devices. By wearing a Head-Mounted Display, users enter a 360-degree virtual world. In addition, Co.'s research center "The Outing Research Lab" provides location data analysis consulting services mainly to municipals and railroad companies nationwide.
Founded in 2009, Pelham Smithers Associates (PSA) provides market intelligence on Asian technology, focusing in particular on Japan. The industries covered by our team of specialists are: consumer electronics, telecomms, pharmaceuticals, internet, electronic parts and materials, automotive technology, retail and capital goods.
PSA produces both company and sector reports. The focus of PSA’s research is to identify winners and losers as new technologies impact the top and bottom lines of corporations. Critical to our research is the clear explanation of how these new technologies work and how they impact companies and industries.
The founding partners have worked closely together for twenty years and the team has more than doubled in size since 2012.
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