Gravity Co., Ltd.

GRVY Details

Gravity Co., Ltd. (NASDAQ: GRVY) is a Korea-based online and mobile game developer and publisher. Its main product is Ragnarok Online, a popular online game presently available in 91 markets and countries, including Japan and Taiwan. As of November 16, 2021, the company has 6.95 million American Depository Shares (ADS) listed and outstanding, with each ADS representing one common share.

Latest News:

• Geographic Expansion: On November 11, 2021, GRVY announced the official launch of Ragnarok Origin, a massive mobile-based multiplayer online Role-Playing Game (MMORPG) in the United States and Canada. In addition, GRVY's wholly-owned subsidiary in Thailand, Gravity Game Tech., Ltd., officially launched Ragnarok Classic in Thailand on October 28, 2021.
• Revealed G-star 2021 Line-up: On November 05, 2021, GRVY announced that it had released a complete list of GSTAR 2021 games and launched an official website. In addition, the company plans to open a large booth at GSTAR 2021 to display thirteen titles, including Ragnarok IP-based games and launches from FY21 to H2FY22.

9MFY21 Results:

• Improvement in Revenues: GRVY witnessed an increase of 8.12% in its total net revenues to KRW 317.34 billion during 9MFY21 (ended September 30, 2021) compared to KRW 293.51 billion during 9MFY20, due to increased revenues from Ragnarok X: Next Generation in Southeast Asia, launched on June 18, 2021, and Ragnarok Origin in Japan, launched on June 28, 2021.
• Increase in Net Income: The company recorded a net income of KRW 64.66 billion during 9MFY21 vs. KRW 47.57 billion during 9MFY20.
• Healthy Balance Sheet: As of September 30, 2021, the company had cash and cash equivalents (including short-term investments) of KRW 226.17 billion and no outstanding debt.

Region-Wise Revenue Mix (Source: Q3FY21 IR Presentation, November 2021)

Key Risks:

• Product Concentration: Ragnarok Online accounted for about 20.8% and 10.5% of GRVY's overall sales in FY20 and FY19, respectively. Ragnarok M: Eternal Love, a mobile game, accounted for 43.6% and 80.0% of its total revenues in FY20 and FY19. As a result, any failure to continually evolve, update, and improve the Ragnarok gaming universe may diminish the customer base and negatively influence its financials.
• Dependence on Third-Party Developers: In 2020, GRVY generated 74.5% of its income from third-party produced online and mobile games, with 69.8% from mobile games developed by Dream Square. As a result, any disagreement with such critical third-party developers might harm the company's bottom line.

Outlook:

Major Upcoming Launches (Source: Q3FY21 IR Presentation, November 2021)

GRVY Daily Technical Chart (Source: REFINITIV)

Stock Recommendation:

GRVY's stock price has fallen 36.98% in the past nine months and is currently trading in the lower band of its 52-week range of USD 81.00 to USD 239.90. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 39.23.

Considering the significant correction in the stock price, strong balance sheet, geographical expansion, current valuation, and associated risks, we recommend a "Speculative Buy" rating on the stock at the current price of USD 90.24, down 2.62% as of November 16, 2021, 11:48 AM ET.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.

*Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached.

TFF Pharmaceuticals, Inc.

TFFP Details

TFF Pharmaceuticals, Inc. (NASDAQ: TFFP) is a clinical-stage biopharmaceutical business dedicated to developing and commercializing novel treatments based on its unique Thin Film Freezing. Voriconazole Inhalation Powder (TFF VORI) and Tacrolimus Inhalation Powder (TFF TAC) are the company's two key drug prospects. In addition, it intends to expand its portfolio by partnering with large pharmaceutical companies. 

Product Pipeline (Source: Company Website)

Latest News:

• Completion of Phase 1b Study: TFFP announced the completion of dosing in the Phase 1b clinical study of TFF VORI, an inhaled dry powder form of voriconazole for the treatment and prevention of Invasive Pulmonary Aspergillosis (IPA), on November 08, 2021. The trial's preliminary findings indicate that TFF VORI is well tolerated in asthma patients, bolstering the company's decision to move on with a Phase 2 study in IPA patients.
• Clearance for Human Clinical Trials: On October 28, 2021, TFFP stated that it had gained authorization from Health Canada to conduct a Phase 1 clinical study of niclosamide, an antiviral medication that could potentially treat COVID-19 and other contagious diseases. The first patient will be dosed in the trial in November, with enrollment expected to be completed by early Q1FY22.

9MFY21 Results:

• Grant Revenues: TFFP has not initiated any commercial operations. However, it generated grant revenue of USD 76.17 thousand during 9MFY21 (ended September 30, 2021).
• Increase in Net Losses: It witnessed an increase in net losses to USD 20.99 million during 9MFY21 vs. USD 12.67 million during 9MFY20.
• Decent Balance Sheet: As of September 30, 2021, the company had cash and cash equivalents of USD 44.72 million and no outstanding debt.

Key Risks:

• Reliance on Patent Rights: TFFP's overall business is based on the patent rights granted to them by the University of Texas at Austin (UT). The patent license agreement calls for TFFP to pay royalties and milestone payments and adhere to several covenants and commitments. Noncompliance with such standards may result in contract termination, which may jeopardize the company's operations.
• Regulatory Risk: The success of TFFP's three TFF product candidates is critical to its growth prospects. It has spent a large amount of money on its drug development. As a result, its operations may suffer if it cannot get marketing authorization or establish an effective production and distribution structure.

Outlook:

• Upcoming Plans: According to TFFP's Q3FY21 press release, its Inhaled Voriconazole and Inhaled Tacrolimus Powder Phase 2 programs will begin with an interim data analysis and datasets expected to be completed by mid-2022. In addition, in Q1FY22, it will start identifying licensing partners to commercialize its assets eventually.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation

 (Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

TFFP Daily Technical Chart (Source: REFINITIV)

Stock Recommendation:

TFFP's stock price has fallen 62.71% in the past nine months and made a fresh 52-Week low today. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 31.46.  We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 8.01.

Considering the significant correction in the stock price in the past nine months, positive clinical trial results, regulatory clearance, current valuation, and associated risks, we recommend a "Speculative Buy" rating on the stock at the current price of USD 6.50, down 6.61% as of November 16, 2021, at 10:29 AM ET.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.

*Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached.