Here’s why Korean online game developer Webzen (WZEN) is the best way you can reap profits in this red-hot sector.
With more than 56 million registered users, Webzen’s three-dimensional multiplayer online role-playing game “MU” has developed a cult following among gamers throughout Korea, China, Japan, and the rest of Asia. A whopping 70,000 players in Korea and 320,000 in China are playing the game online as you read this. That’s more than the population of Miami.
Webzen has recently announced a licensing deal to distribute its games into China, with Chinese publishing firm The 9 to release Webzen’s new title Soul of the Ultimate Nation in China. After receiving $13 million, Webzen will receive an additional 22% of the royalty from revenues in the Chinese distribution of the game for the first three years of the game’s operation.
And unlike many one-hit wonders in this industry, Webzen is focused on becoming a truly global online entertainment leader. As part of this effort, Webzen recently unveiled plans to set up nine new development studios throughout the world. The studios will employ 450 development staff to work on PC online game and client/server technologies as well as games for next-generation consoles.
Webzen also recently announced plans enter the US market with a new subsidiary, Webzen America, based in LA. So you may be seeing Webzen products on US store shelves before too long.
Let’s buy Webzen (WZEN) at market this week, and place your initial stop at $6.70. As this is a volatile stock, you may want to limit your position size. To shoot for even higher profits, buy the June $10 call options (QZEFB.X).
Portfolio Update
To make room for Webzen, let’s take our profits on China Mobile (CHL) stock.
Last week’s pick, Woori Financial (WF), is off to a flying start, and up almost 5% last week, after an upgrade to “outperform” by Bear Stearns.
America Movil (AMX) hit new highs last week. The stock is up 24% and our (second round of) AMX options are up another 56%. Move your stop to $27.80.
NII Holdings (NIHD) is also close to hitting record highs, so move your stop to $42.50.
Both Elan (ELN) and Sify (SIFY) are up almost 35% since we recommended them, and we’ve already booked triple-digit profits on the options of both these stocks.
Overall, 2006 is off to a strong start with seven out of eight positions showing profits.
