TOKYO -- Dragon Quest on smartphones has helped Japanese video game maker Square Enix Holdings' stock rise.
Market expectations on Square Enix earnings are upbeat thanks to its new game for smartphones, "Dragon Quest Monsters Super Light."
The company's stock surged in late January, after the company on Jan. 23 released the game, going limit up for two consecutive days. Downloads of the new Dragon Quest game recently topped 2 million.
Domestically-released online games helped push Square Enix's group pretax profit up for the April-December period, announced Feb. 5, to 9.9 billion yen ($95.6 million). The same period the previous year, Square Enix made a 4.2 billion yen pretax loss. Eiji Maeda of Japanese brokerage SMBC Nikko Securities said that the company "has paved the way for making profits from its online game business."
The company's group pretax profit has topped its annual forecast, which was in the 5-9 billion yen range. But still, the company has maintained that forecast. According to Kazuharu Watanabe, chief financial officer at Square Enix, the yen's rise could hurt the company's earnings. Unless the yen rises significantly, there is room for the company's earnings to grow. This view is supporting the game maker's stock price.
Meanwhile, the company's price-to-earnings ratio is now around 62, making the issue less attractive to bargain hunters, compared with approximately 18 of its rival Namco Bandai Holdings and Capcom. To make the stock climb even further, Square Enix needs to show that the outlook for next fiscal year and beyond is bright.