Core Viewpoint - ZhiZi City Technology (09911) reported a significant increase in revenue and net profit for the first half of 2025, indicating strong growth potential in the Middle East and North Africa market [1] Financial Performance - The company achieved a revenue growth of 40.0% year-on-year and a substantial increase in net profit attributable to shareholders of 117.8% [1] - The core products in the Middle East and North Africa region saw revenue growth exceeding 60% year-on-year, continuing the rapid growth trend from 2024 [1] Market Strategy - The continuous growth in the Middle East and North Africa suggests that the company's localized operations are beginning to show a "compound interest effect," with increasing market barriers [1] - The company is steadily progressing towards its strategic goal of penetrating the Middle Eastern market, with several products leading in their respective segments [1] Analyst Insights - CICC has slightly raised its profit expectations for the company for the full year, considering the improved operating profit margin in the first half [1] - Historically, the second half of the year is a peak season for the company, with revenue trends typically showing a pattern of lower performance in the first half and higher performance in the second half [1] - New products such as SUGO and TopTop have shown accelerated year-on-year revenue growth in July, indicating potential for revenue elasticity in the second half [1]

Core Insights - The company, Zhizi City Technology, reported significant growth in its mid-2025 performance, with a revenue increase of 40.0% year-on-year and a net profit growth of 117.8%, driven by the dual explosion of social and innovative businesses, as well as the deepening application of AI technology [1][4]. Business Segments - The social business remains the primary revenue contributor, with new products TopTop and SUGO showing explosive growth, while established products MICO and YoHo continue to provide stable profits [4]. - The innovative business saw a remarkable revenue increase of 70.5%, with both premium games and social e-commerce performing exceptionally well [4][7]. Market Performance - The MENA region continues to be a strong market for the company, with core social product revenues in this area growing over 60% year-on-year [4][7]. - In the first half of the year, the social business generated revenue of 2.834 billion yuan, reflecting a 37.0% year-on-year increase, with SUGO and TopTop achieving revenue growth exceeding 100% [7]. AI Integration - AI technology has been increasingly applied in various business scenarios, enhancing operational metrics and improving user satisfaction and retention [11][12]. - The launch of Aippy, a no-code creative content community powered by AI, allows users to easily create websites and games, targeting users without programming skills [12].

Core Insights - The company reported a significant increase in revenue and profit for the first half of 2025, driven by the growth of its social and innovative businesses, as well as the deepening application of AI technology [1][2][3] Financial Performance - The company achieved a customer contract revenue of 3.181 billion yuan, a year-on-year increase of 40.0% [1] - Gross profit reached 1.775 billion yuan, up 55.6% year-on-year [1] - Net profit attributable to shareholders was 489 million yuan, a substantial increase of 117.8% year-on-year [1] Business Segments - Social business revenue was 2.834 billion yuan, reflecting a growth of 37.0% year-on-year, with standout performances from the SUGO and TopTop platforms, both exceeding 100% growth [1] - The innovative business generated 347 million yuan in revenue, marking a 70.5% increase year-on-year [2] - The company's core social products in the Middle East and North Africa saw revenue growth exceeding 60% year-on-year, indicating strong local market penetration [2] AI Integration - The company plans to deepen the application of AI in business scenarios to enhance research and development efficiency, operational precision, and user experience [3] - Key operational metrics for SUGO improved with AI support, including increased user engagement and payment rates [3] - The launch of the AI-based zero-code creative content community, Aippy, allows users to create content easily, targeting non-programmers [3] Global Strategy - The company has established a regional headquarters in Riyadh for the Middle East and North Africa and has set up its global headquarters in Hong Kong [3] - The global market strategy is evolving, with flagship products like SUGO beginning to penetrate Latin America and parts of Europe, demonstrating high market adaptability [2]

Core Insights - The company reported a significant increase in social business revenue, reaching 2.834 billion yuan, a year-on-year growth of 37.0% [1] - The game social platform TopTop achieved a milestone by surpassing 10 million USD in monthly revenue for the first time, becoming the third social product of the company to reach this level after MICO and SUGO [1] - TopTop was developed to cater to the needs of users in the Middle East and North Africa, combining local gaming features with voice social gameplay, and has been well-received by local users [1] Financial Performance - Social business revenue for the first half of the year was 2.834 billion yuan, reflecting a 37.0% increase compared to the previous year [1] - TopTop's monthly revenue exceeded 10 million USD for the first time, indicating strong market performance [1] Product Development - The launch of TopTop demonstrates the company's ability to continuously introduce successful products [1] - The product's success is expected to strengthen the company's social business foundation and enhance its competitiveness in the Middle East and North Africa market [1]

Core Viewpoint - The company reported a significant increase in revenue and net profit for the first half of 2025, indicating strong growth and market performance, particularly in the Middle East and North Africa region [1] Financial Performance - The company's revenue grew by 40.0% year-on-year [1] - The net profit attributable to the parent company surged by 117.8% [1] Regional Performance - The Middle East and North Africa market showed exceptional performance, with core product revenue in the region increasing by over 60% year-on-year [1] - Continuous growth in this region suggests that the company's localized operations are demonstrating a "compound effect," leading to deepening market barriers [1] Strategic Goals - The company is steadily progressing towards its strategic goal of penetrating the Middle Eastern market, with several products leading in their respective segments locally [1]

Core Viewpoint - The company reported significant growth in its mid-year performance for 2025, driven by the dual expansion of its social and innovative businesses, alongside the deepening application of AI technology, with revenue increasing by 40.0% year-on-year and net profit rising by 117.8% [1][4]. Business Performance - The social business remains the primary revenue contributor, with new products TopTop and SUGO showing explosive growth, while established products MICO and YoHo continue to provide stable profits [3][4]. - Innovative business revenue surged by 70.5% year-on-year, with standout performances in premium games and social e-commerce [3][6]. Financial Metrics - For the six months ending June 30, 2025, the company achieved customer contract revenue of 3.181 billion yuan, a 40.0% increase; gross profit reached 1.775 billion yuan, up 55.6%; net profit attributable to shareholders was 489 million yuan, a significant increase of 117.8%; adjusted EBITDA was 646 million yuan, growing by 44.0% [4]. - The social business generated revenue of 2.834 billion yuan, reflecting a 37.0% year-on-year growth, with SUGO and TopTop both exceeding 100% growth in revenue [4][6]. Market Insights - The MENA region continues to be a strong market for the company, with core social product revenue in this area growing over 60% year-on-year, maintaining last year's rapid growth trend [9][12]. - The company's localized operations in the MENA region are showing a "compound effect," with increasing market barriers and a strategic goal of penetrating the Middle East [12]. AI Technology Application - The company is deepening the application of AI in its business operations to enhance research and development efficiency, operational precision, and user experience in social products [13][18]. - For instance, SUGO has seen improvements in various operational metrics such as user online duration, payment rates, and ARPU, attributed to AI enhancements [18]. Global Strategy - The company has established its regional headquarters in Riyadh for the MENA region and has set up its global headquarters in Hong Kong, aiming to leverage these locations for better coordination with global R&D and operations [20].

Core Insights - The company reported a 40.0% year-on-year increase in revenue for the first half of 2025, with a significant 117.8% growth in net profit attributable to shareholders [1] - The Middle East and North Africa (MENA) market showed exceptional performance, with core product revenue in the region growing over 60% year-on-year, continuing the rapid growth trend from 2024 [1] - The continuous growth in the MENA region indicates that the company's localized operations are gradually demonstrating a "compound effect," with increasing market barriers [1] - With multiple products leading in their respective segments locally, the company is steadily progressing towards its strategic goal of penetrating the Middle Eastern market [1]

Executive Summary [Financial Highlights](index=1&type=section&id=Financial%20Highlights) The company achieved strong financial growth in H1 2025, with customer contract revenue up **40.0%** to **RMB 3.18 billion** and profit attributable to equity holders surging **117.8%** to **RMB 489 million** | Metric | 2025 (RMB million) | 2024 (RMB million) | Year-on-Year Growth | | :--- | :--- | :--- | :--- | | Customer Contract Revenue | 3,181.3 | 2,271.9 | 40.0% | | Gross Profit | 1,775.1 | 1,141.0 | 55.6% | | Profit for the Period | 506.9 | 387.6 | 30.8% | | Profit Attributable to Equity Holders | 489.3 | 224.7 | 117.8% | | Adjusted EBITDA | 645.7 | 448.5 | 44.0% | [Business Summary](index=3&type=section&id=Business%20Summary) Both social and innovation businesses performed well, with social revenue reaching **RMB 2.83 billion** and innovation revenue **RMB 347 million**, growing **37.0%** and **70.5%** respectively | Business Segment | Revenue (RMB million) | Year-on-Year Growth | | :--- | :--- | :--- | | Social Business | 2,834 | 37.0% | | Innovation Business | 347 | 70.5% | - Core products in the Middle East and North Africa market saw business scale increase by **over 60%** year-on-year[9](index=9&type=chunk) - Establishment of Hong Kong global headquarters strengthens the globalization strategy[10](index=10&type=chunk) Chairman's Report [Overall Performance and Strategic Milestones](index=4&type=section&id=Overall%20Performance%20and%20Strategic%20Milestones) The Chairman's report highlights H1 2025 as a period of solid business foundation, with significant revenue and profit growth across social and innovation segments - Total revenue reached **RMB 3.18 billion**, a **40.0%** year-on-year increase; profit attributable to equity holders reached **RMB 489 million**, up **117.8%** year-on-year[11](index=11&type=chunk) - Establishment of Hong Kong global headquarters marks a new stage in the globalization strategy[12](index=12&type=chunk) - Organizational structure upgrade initiated, centralizing underlying capabilities like product, R&D, operations, and growth to enhance refined management and resource allocation efficiency[12](index=12&type=chunk) [Corporate Social Responsibility](index=5&type=section&id=Corporate%20Social%20Responsibility) The company actively fulfills its corporate social responsibility through donations in the Middle East and Southeast Asia, and global youth protection initiatives - Donated supplies and funds to local orphanages during Ramadan in the Middle East[13](index=13&type=chunk) - Collaborated with local creators in Southeast Asia to donate food and funds to charity schools for children in need[13](index=13&type=chunk) - Continuously promotes the "Baby Pig Youth Protection Program" globally, focusing on the healthy growth of children and adolescents worldwide[13](index=13&type=chunk) Performance Review [Pan-population Social Business](index=5&type=section&id=Pan-population%20Social%20Business) Pan-population social business achieved solid growth in H1 2025, with platforms like SUGO and TopTop seeing over 100% revenue and profit growth, enhanced by AI technology - SUGO revenue increased by **over 100%**, with profit growing by **over 150%**[14](index=14&type=chunk) - TopTop revenue increased by **over 100%** year-on-year, with profit growing by **over 100%**[14](index=14&type=chunk) - SUGO ranked **7th** in social networking app revenue in the Middle East, and TopTop ranked **10th** in Google Play game app rankings[14](index=14&type=chunk) - Self-developed multimodal algorithm model Boomiix continues to upgrade, enhancing product social matching efficiency and intelligent operations[15](index=15&type=chunk) [Diverse-population Social Business](index=6&type=section&id=Diverse-population%20Social%20Business) Diverse-population social business maintained healthy growth in H1 2025, expanding HeeSay's brand influence in key markets and leveraging AI for improved user experience and efficiency - HeeSay's brand influence further expanded in core markets like Southeast Asia, with HeeSay GALA held in Thailand and the Philippines in January 2025[17](index=17&type=chunk) - AI technology applied to recommendation systems, operational intelligence, and risk control strategies, enhancing user social experience and commercial efficiency[17](index=17&type=chunk) - HeeSay ranked **16th** in Google Play's social app revenue list in the Southeast Asian market[17](index=17&type=chunk) [Innovation Business](index=6&type=section&id=Innovation%20Business) Innovation business established a clear second growth curve in H1 2025, with premium games entering profitability, social e-commerce growing over 100%, and new AI content communities launched - Premium game business officially entered the profitability recovery period, with flagship game "Alice's Dream: Merge Games" entering long-term operation[18](index=18&type=chunk) - Deep application of AI significantly shortened game R&D cycles, improving user retention and ARPU performance[18](index=18&type=chunk) - Social e-commerce "Hormone Health" profit increased by **over 100%** year-on-year, solidifying its leading position in the health service niche market[19](index=19&type=chunk) - Launched AI creative content community Aippy, entering the AI Agent and AI content community sectors[19](index=19&type=chunk) Strategy and Outlook [Deepening Social Product Portfolio Diversification and Market Layout](index=7&type=section&id=Deepening%20Social%20Product%20Portfolio%20Diversification%20and%20Market%20Layout) The company will diversify its social product portfolio, strengthen market presence in MENA, expand into new markets, and leverage organizational upgrades and AI technology for growth - The global social application market is projected to exceed **USD 310.37 billion** by 2030[20](index=20&type=chunk) - Continuously consolidate the leading positions of products like MICO, YoHo, SUGO, TopTop, and HeeSay in their respective vertical segments, and develop more products with monthly revenue exceeding **tens of millions of US dollars**[20](index=20&type=chunk) - Continue to firmly invest and exert efforts in the Middle East and North Africa market, consolidate its leading position, and actively expand into new markets to complete the global layout[20](index=20&type=chunk) - Rely on the organizational upgrade initiated in H1 2025 to further enhance resource coordination efficiency and response speed, and deepen AI technology empowerment across the entire process[21](index=21&type=chunk) [Continuing to Advance Innovation Business, Consolidating Second Growth Curve](index=8&type=section&id=Continuing%20to%20Advance%20Innovation%20Business,%20Consolidating%20Second%20Growth%20Curve) The company will advance its innovation business in H2 2025, focusing on long-term operation of premium games, expanding social e-commerce, and exploring AI+ social entertainment products - Adhere to the "premium game" strategy, continuously enhance long-term game operation capabilities, focus on the merge-puzzle casual game segment, and actively plan new product launches through "product replication"[22](index=22&type=chunk) - Social e-commerce business will deeply cultivate the HIV prevention and sexual health service fields, upgrading services and expanding categories based on user needs[22](index=22&type=chunk) - Continuously explore "AI+social entertainment" innovative products, leveraging new products like Aippy to seize new opportunities in the emotional value track in the AI era[22](index=22&type=chunk) [Deepening AI Application, Exploring Technology Opportunities](index=8&type=section&id=Deepening%20AI%20Application,%20Exploring%20Technology%20Opportunities) The company will deepen AI integration across business scenarios, upgrade its AI platform, and invest in AI+ social/entertainment/gaming products to capture new market opportunities - Continuously upgrade the AI middle platform, implementing AI efficiency systems for different business needs, assisting existing products in achieving more precise social matching, content recommendations, efficient risk control audits, ecological operations, user identification, and marketing acquisition[23](index=23&type=chunk) - Increase investment in AI, actively deploying innovative products in areas such as "AI+social," "AI+entertainment," and "AI+gaming"[23](index=23&type=chunk) - Believes that the global emotional value track is ushering in new breakthroughs, and AI technology will comprehensively enhance productivity, bringing greater commercialization and profit potential[23](index=23&type=chunk) Financial Review [Revenue](index=9&type=section&id=Revenue) In H1 2025, customer contract revenue reached **RMB 3.18 billion**, up **40.0%**, driven by strong growth in both social (**37.0%**) and innovation (**70.5%**) businesses | Business Segment | 2025 (RMB thousand) | Proportion | 2024 (RMB thousand) | Proportion | Year-on-Year Change | | :--- | :--- | :--- | :--- | :--- | :--- | | Social Business | 2,834,334 | 89.1% | 2,068,453 | 91.0% | 37.0% | | Innovation Business | 346,931 | 10.9% | 203,472 | 9.0% | 70.5% | | **Total** | **3,181,265** | **100.0%** | **2,271,925** | **100.0%** | **40.0%** | - Social business growth primarily attributed to deeper user demand insights, intensified local operations, diversified product portfolio, active new market expansion, and enhanced commercial efficiency through AI technology iteration of recommendation systems[24](index=24&type=chunk) - Innovation business growth mainly benefited from the steady development of traffic monetization, social e-commerce, and contributions from premium games[25](index=25&type=chunk) [Cost of Revenue](index=10&type=section&id=Cost%20of%20Revenue) In H1 2025, cost of revenue increased by **24.3%** to **RMB 1.41 billion**, primarily due to higher revenue sharing, share-based payments, and employee benefits in the social business | Metric | 2025 (RMB thousand) | Proportion | 2024 (RMB thousand) | Proportion | Year-on-Year Change | | :--- | :--- | :--- | :--- | :--- | :--- | | Live Streamer and Channel Revenue Sharing | 903,660 | 28.4% | 787,258 | 34.7% | 14.8% | | Employee Benefit Expenses | 179,316 | 5.6% | 132,888 | 5.8% | 34.9% | | Share-based Payment Expenses | 112,985 | 3.6% | 20,776 | 0.9% | 443.8% | | **Total** | **1,406,145** | **44.2%** | **1,130,894** | **49.8%** | **24.3%** | - Social business cost of revenue increased by **26.4%**, mainly due to increased live streamer and channel revenue sharing, share-based payment expenses, and employee benefit expenses[26](index=26&type=chunk) - Innovation business cost of revenue saw a marginal increase of **0.3%**[27](index=27&type=chunk) [Gross Profit and Gross Margin](index=11&type=section&id=Gross%20Profit%20and%20Gross%20Margin) In H1 2025, gross profit increased by **55.6%** to **RMB 1.78 billion**, with gross margin rising to **55.8%**, driven by improved efficiency and strong performance in both segments | Business Segment | 2025 Gross Profit (RMB thousand) | 2025 Gross Margin | 2024 Gross Profit (RMB thousand) | 2024 Gross Margin | Gross Profit Year-on-Year Change | | :--- | :--- | :--- | :--- | :--- | :--- | | Social Business | 1,519,437 | 53.6% | 1,028,565 | 49.7% | 47.7% | | Innovation Business | 255,683 | 73.7% | 112,466 | 55.3% | 127.3% | | **Total** | **1,775,120** | **55.8%** | **1,141,031** | **50.2%** | **55.6%** | - The increase in social business gross margin is primarily due to optimized resource allocation and improved operating efficiency through organizational structure upgrades and refined management of core businesses[29](index=29&type=chunk) - The increase in innovation business gross margin is mainly attributed to the steady development of traffic monetization, social e-commerce businesses, and contributions from premium games[29](index=29&type=chunk) [Operating Expenses](index=11&type=section&id=Operating%20Expenses) In H1 2025, selling and marketing expenses surged **108.0%** to **RMB 1.00 billion**, while R&D and G&A expenses saw modest increases, mainly due to higher employee benefits [Selling and Marketing Expenses](index=11&type=section&id=Selling%20and%20Marketing%20Expenses) - Selling and marketing expenses were **RMB 1.00 billion**, an increase of **108.0%** from **RMB 482 million** in H1 2024[30](index=30&type=chunk) - This increase was primarily due to intensified efforts in promoting social businesses[30](index=30&type=chunk) [Research and Development Expenses](index=11&type=section&id=Research%20and%20Development%20Expenses) - Research and development expenses were **RMB 168 million**, an increase of **2.3%** from **RMB 164 million** in H1 2024[31](index=31&type=chunk) - This was mainly due to an increase in employee benefit expenses[31](index=31&type=chunk) [General and Administrative Expenses](index=12&type=section&id=General%20and%20Administrative%20Expenses) - General and administrative expenses were **RMB 122 million**, an increase of **15.2%** from **RMB 106 million** in H1 2024[32](index=32&type=chunk) - This was mainly due to an increase in employee benefit expenses[32](index=32&type=chunk) [Operating Profit and Net Profit](index=12&type=section&id=Operating%20Profit%20and%20Net%20Profit) Operating profit increased by **30.8%** to **RMB 479 million** in H1 2025, driven by gross profit growth partially offset by higher selling and marketing expenses, with net profit also up **30.8%** - Operating profit was **RMB 479 million**, an increase of **30.8%** from **RMB 367 million** in H1 2024[33](index=33&type=chunk) - The increase in operating profit was primarily due to a **RMB 634 million** increase in gross profit, partially offset by a **RMB 520 million** increase in selling and marketing expenses[33](index=33&type=chunk) - Net finance income increased to **RMB 26.4 million**, up from **RMB 18.2 million** in H1 2024, mainly due to increased interest income from bank deposits[34](index=34&type=chunk) - Profit for the period was **RMB 507 million**, an increase of **30.8%** from **RMB 388 million** in H1 2024[36](index=36&type=chunk) [Non-IFRS Measures](index=12&type=section&id=Non-IFRS%20Measures) Adjusted EBITDA, a non-IFRS measure, increased by **44.0%** to **RMB 646 million** in H1 2025, providing a clearer view of core business performance by excluding non-operating items | Metric | 2025 (RMB thousand) | 2024 (RMB thousand) | Year-on-Year Growth | | :--- | :--- | :--- | :--- | | Operating Profit | 479,385 | 366,585 | 30.8% | | Add: Share-based Payment Expenses | 122,959 | 33,377 | 268.4% | | Add: Depreciation and Amortization | 43,382 | 48,502 | -10.6% | | **Adjusted EBITDA** | **645,726** | **448,464** | **44.0%** | - Adjusted EBITDA is defined as adjusted operating profit, with adjustments including share-based payment expenses, depreciation, and amortization[38](index=38&type=chunk) Financial Position and Cash Flow [Capital Structure](index=14&type=section&id=Capital%20Structure) As of June 30, 2025, total assets increased to **RMB 3.89 billion**, total liabilities decreased to **RMB 1.76 billion**, and the asset-liability ratio improved to **45.2%**, indicating a more robust financial position - Total assets increased from **RMB 3,583.0 million** as of December 31, 2024, to **RMB 3,889.7 million** as of June 30, 2025[40](index=40&type=chunk) - Total liabilities decreased from **RMB 1,928.1 million** as of December 31, 2024, to **RMB 1,759.1 million** as of June 30, 2025[40](index=40&type=chunk) - The asset-liability ratio decreased from **53.8%** as of December 31, 2024, to **45.2%** as of June 30, 2025[40](index=40&type=chunk) [Financial Resources and Operating Cash Flow](index=14&type=section&id=Financial%20Resources%20and%20Operating%20Cash%20Flow) As of June 30, 2025, cash and cash equivalents increased to **RMB 2.22 billion**, with net cash inflow from operating activities significantly rising to **RMB 539 million** - As of June 30, 2025, cash and cash equivalents were **RMB 2,215.9 million**, compared to **RMB 2,048.6 million** as of December 31, 2024[41](index=41&type=chunk) - Net cash inflow from operating activities for the six months ended June 30, 2025, increased to **RMB 539.4 million**, compared to **RMB 358.7 million** for the six months ended June 30, 2024[41](index=41&type=chunk) [Other Financial Items](index=15&type=section&id=Other%20Financial%20Items) The company invests surplus cash in low-risk financial products, with financial assets at fair value decreasing to **RMB 154 million** due to redemptions, and plans strategic investments for synergy - As of June 30, 2025, financial assets measured at fair value decreased to **RMB 153.5 million**, primarily due to the redemption of wealth management products[42](index=42&type=chunk) - Capital expenditure for the six months ended June 30, 2025, was **RMB 5.3 million**, an increase of **RMB 0.7 million** compared to **RMB 4.6 million** for the six months ended June 30, 2024[43](index=43&type=chunk) - Plans to undertake strategic investments or acquisitions to create synergistic effects among its businesses[46](index=46&type=chunk) - As of June 30, 2025, the company had no assets pledged and no significant contingent liabilities[45](index=45&type=chunk)[47](index=47&type=chunk) Risks and Uncertainties [Key Business Risks](index=16&type=section&id=Key%20Business%20Risks) The company faces significant business risks including intense competition, inability to innovate, mobile internet stagnation, content liability, data privacy breaches, and cybersecurity vulnerabilities - Faces intense competition in a rapidly developing industry, potentially unable to maintain R&D innovation or successfully compete with existing and future competitors[50](index=50&type=chunk) - If the mobile internet industry fails to continue its development, profitability and prospects may be materially and adversely affected[50](index=50&type=chunk) - May be held liable for information or content displayed, published, or linked on mobile applications, potentially leading to user loss and reputational damage[50](index=50&type=chunk) - Misappropriation or misuse of private data and non-compliance with data protection laws and regulations may result in claims, fines, increased operating costs, or a reduction in users and customers[50](index=50&type=chunk) - Failure to prevent security breaches, cyberattacks, or other unauthorized access to systems or user data could lead to severe consequences[50](index=50&type=chunk) [Foreign Exchange Risk and Post-reporting Period Events](index=16&type=section&id=Foreign%20Exchange%20Risk%20and%20Post-reporting%20Period%20Events) The company is exposed to foreign exchange risks from USD and HKD denominated transactions but did not hedge during H1 2025, with no significant post-reporting period events to disclose - Operates international businesses, with major receipts and payments denominated in US dollars, exposing it to foreign exchange risks arising from currencies such as the US dollar and Hong Kong dollar[48](index=48&type=chunk) - For the six months ended June 30, 2025, the company did not hedge any foreign exchange fluctuations[48](index=48&type=chunk) - The Group had no significant events requiring disclosure after the reporting period[49](index=49&type=chunk) Other Information [Share Transactions](index=17&type=section&id=Share%20Transactions) No listed securities were bought, sold, or redeemed by the company in H1 2025, though Three D Partners Limited purchased **40.34 million shares** under a restricted share unit award scheme - For the six months ended June 30, 2025, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities[51](index=51&type=chunk) | Metric | Value | | :--- | :--- | | Total Shares Purchased | 40,338,000 shares | | Percentage of Total Issued Shares Purchased | Approximately 2.86% | | Average Consideration Per Share | Approximately HKD 4.29 | | Total Consideration for Shares Purchased | Approximately HKD 173,227,130 | [Employees and Remuneration](index=17&type=section&id=Employees%20and%20Remuneration) As of June 30, 2025, the company had **1,742 full-time employees**, with **55.74%** in R&D, and maintains competitive recruitment, benefits, and performance-based remuneration policies - As of June 30, 2025, the company had a total of **1,742** full-time employees, of whom **971** (**55.74%** of the total full-time employees) were engaged in research and development activities[53](index=53&type=chunk) - A systematic recruitment process is in place, offering competitive benefits and training opportunities[53](index=53&type=chunk) - Employee salaries are determined with reference to market conditions and individual employee performance, qualifications, and experience, with performance bonuses and share awards decided based on evaluation ratings[53](index=53&type=chunk) Corporate Governance [Audit Committee](index=17&type=section&id=Audit%20Committee) The company has established an Audit Committee in accordance with the Corporate Governance Code, comprising three independent non-executive directors, with Mr. Chi Shujin as Chairman - An Audit Committee has been established in accordance with the Corporate Governance Code, consisting of three independent non-executive directors, with Mr. Chi Shujin as Chairman[54](index=54&type=chunk) [Compliance with Corporate Governance Code](index=18&type=section&id=Compliance%20with%20Corporate%20Governance%20Code) The company adheres to a rigorous corporate governance framework, complying with the Listing Rules' Corporate Governance Code throughout the reporting period, with a board composition ensuring independence - The company has adopted the Corporate Governance Code set out in Appendix C1 to the Listing Rules and has complied with the principles and code provisions therein during the reporting period[55](index=55&type=chunk)[56](index=56&type=chunk) - The Board currently comprises four executive directors and three independent non-executive directors, ensuring a considerable degree of independence in its composition[55](index=55&type=chunk) [Compliance with Model Code for Securities Transactions by Directors](index=18&type=section&id=Compliance%20with%20Model%20Code%20for%20Securities%20Transactions%20by%20Directors) The company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers, and all directors confirmed compliance during the reporting period - The company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix C3 to the Listing Rules[57](index=57&type=chunk) - Each director has confirmed, following specific enquiry, that they have complied with the required standards set out in the Model Code during the reporting period[57](index=57&type=chunk) Interim Dividend [Dividend Decision](index=18&type=section&id=Dividend%20Decision) The Board of Directors has resolved not to declare an interim dividend for the six months ended June 30, 2025 - The Board of Directors has resolved not to declare an interim dividend for the six months ended June 30, 2025[58](index=58&type=chunk) Financial Statements [Interim Condensed Consolidated Statement of Comprehensive Income](index=19&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Comprehensive%20Income) The unaudited interim condensed consolidated statement of comprehensive income for H1 2025 shows customer contract revenue of **RMB 3.18 billion**, profit for the period of **RMB 507 million**, and basic earnings per share of **RMB 0.39** | Metric | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Customer Contract Revenue | 3,181,265 | 2,271,925 | | Gross Profit | 1,775,120 | 1,141,031 | | Operating Profit | 479,385 | 366,585 | | Profit for the Period | 506,931 | 387,618 | | Profit Attributable to Equity Holders | 489,283 | 224,676 | | Basic Earnings Per Share (RMB) | 0.39 | 0.20 | | Diluted Earnings Per Share (RMB) | 0.38 | 0.20 | [Interim Condensed Consolidated Statement of Financial Position](index=21&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2025, the consolidated statement of financial position reports total assets of **RMB 3.89 billion**, total liabilities of **RMB 1.76 billion**, and total equity of **RMB 2.13 billion** | Metric | 2025 June 30 (RMB thousand) | 2024 December 31 (RMB thousand) | | :--- | :--- | :--- | | Total Non-current Assets | 858,440 | 767,897 | | Total Current Assets | 3,031,268 | 2,815,091 | | **Total Assets** | **3,889,708** | **3,582,988** | | Total Current Liabilities | 1,319,181 | 1,498,147 | | Total Non-current Liabilities | 439,911 | 429,956 | | **Total Liabilities** | **1,759,092** | **1,928,103** | | **Total Equity** | **2,130,616** | **1,654,885** | [Interim Condensed Consolidated Statement of Changes in Equity](index=24&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) For H1 2025, total equity increased from **RMB 1.66 billion** to **RMB 2.13 billion**, with equity attributable to equity holders rising from **RMB 1.54 billion** to **RMB 2.00 billion**, influenced by profit and share-based payments | Metric | 2025 January 1 (RMB thousand) | 2025 June 30 (RMB thousand) | | :--- | :--- | :--- | | Equity Attributable to Equity Holders of the Company | 1,541,123 | 1,998,443 | | Non-controlling Interests | 113,762 | 132,173 | | **Total Equity** | **1,654,885** | **2,130,616** | - Profit attributable to equity holders of the company was **RMB 489,283 thousand**, share-based payment expenses were **RMB 122,132 thousand**, and repurchase of own shares was **RMB (160,305) thousand**[69](index=69&type=chunk) [Interim Condensed Consolidated Statement of Cash Flows](index=25&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) For H1 2025, net cash inflow from operating activities significantly increased to **RMB 539 million**, with cash and cash equivalents reaching **RMB 2.22 billion** at period-end, despite net cash outflows from investing and financing activities | Metric | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Net Cash Inflow from Operating Activities | 539,376 | 358,718 | | Net Cash Outflow from Investing Activities | (36,674) | (119,126) | | Net Cash Outflow from Financing Activities | (329,625) | (134,230) | | Cash and Cash Equivalents at End of Period | 2,215,699 | 1,489,113 | - Net cash outflow from financing activities primarily included repurchase of own shares of **RMB (160,305) thousand** and payments to non-controlling interests of **RMB (157,178) thousand**[70](index=70&type=chunk) Notes to Unaudited Interim Financial Information [General Information](index=26&type=section&id=General%20Information) Babypig Technology Co., Ltd., an investment holding company incorporated in Cayman Islands in 2018, primarily engages in social and innovation businesses, and acquired full ownership of NBT Social Networking Inc. in December 2024 - Babypig Technology Co., Ltd. was incorporated in the Cayman Islands on September 12, 2018, primarily engaging in social and innovation businesses[71](index=71&type=chunk) - In December 2024, the company completed the acquisition of a **38.92%** non-controlling interest in NBT Social Networking Inc., making it a wholly-owned subsidiary of the company[73](index=73&type=chunk) [Basis of Preparation and Accounting Policy Changes](index=26&type=section&id=Basis%20of%20Preparation%20and%20Accounting%20Policy%20Changes) The interim financial information is prepared according to HKEX Listing Rules and IAS 34, reviewed by KPMG, and reflects no material impact from IAS 21 amendments, with no new standards adopted - This interim financial information is prepared in accordance with the applicable disclosure requirements of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and IAS 34 "Interim Financial Reporting" issued by the IASB[74](index=74&type=chunk) - The interim financial information is unaudited but has been reviewed by KPMG in accordance with Hong Kong Standard on Review Engagements 2410[74](index=74&type=chunk) - The Group has applied the IAS 21 amendments to the interim financial report for the current accounting period, but it has no material impact on this interim report[75](index=75&type=chunk) [Segment Information](index=27&type=section&id=Segment%20Information) The Group's business activities are reviewed by key operating decision-makers and segmented into social and innovation businesses, with performance assessed based on gross profit - The Group's business activities are regularly reviewed and assessed by the chief operating decision-maker, and are divided into social business and innovation business segments based on revenue sources[77](index=77&type=chunk) - The chief operating decision-maker assesses the performance of operating segments based on gross profit[77](index=77&type=chunk) | Business Segment | Revenue (RMB thousand) | Cost of Revenue (RMB thousand) | Gross Profit (RMB thousand) | | :--- | :--- | :--- | :--- | | Social Business | 2,834,334 | (1,314,897) | 1,519,437 | | Innovation Business | 346,931 | (91,248) | 255,683 | [Expenses by Nature](index=28&type=section&id=Expenses%20by%20Nature) In H1 2025, total expenses reached **RMB 2.70 billion**, with significant increases in promotion and marketing, revenue sharing, employee benefits, and share-based payment expenses | Expense Type | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Promotion and Marketing Expenses | 941,615 | 439,475 | | Live Streamer and Channel Revenue Sharing | 903,660 | 787,258 | | Employee Benefit Expenses | 471,118 | 389,165 | | Share-based Payment Expenses | 122,959 | 33,377 | | **Total** | **2,697,215** | **1,882,213** | [Income Tax Credit](index=29&type=section&id=Income%20Tax%20Credit) In H1 2025, the company recorded an income tax credit of **RMB 0.4 million**, primarily comprising current tax of **RMB 2.89 million** and deferred tax changes of **RMB (3.33) million** | Metric | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Current Tax | 2,889 | 915 | | Deferred Income Tax | (3,329) | (3,856) | | **Income Tax Credit** | **(440)** | **(2,941)** | [Earnings Per Share](index=29&type=section&id=Earnings%20Per%20Share) In H1 2025, basic earnings per share significantly increased to **RMB 0.39**, and diluted earnings per share to **RMB 0.38**, reflecting improved profitability | Metric | 2025 (RMB) | 2024 (RMB) | | :--- | :--- | :--- | | Basic Earnings Per Share | 0.39 | 0.20 | | Diluted Earnings Per Share | 0.38 | 0.20 | - Basic earnings per share are calculated based on profit attributable to equity holders of the company of **RMB 489,283,000** divided by the weighted average number of ordinary shares outstanding during the period of **1,267,962,302** shares[81](index=81&type=chunk) - Diluted earnings per share are calculated by dividing the profit attributable to owners of the company of **RMB 489,283,000** by the weighted average number of ordinary shares outstanding during the period of **1,305,767,865** shares, assuming the exercise of all potentially dilutive ordinary shares[83](index=83&type=chunk) [Dividends](index=29&type=section&id=Dividends) No dividends were paid or declared by the company for the six months ended June 30, 2025, consistent with the prior corresponding period - For the six months ended June 30, 2025, the company did not pay or declare any dividends (for the six months ended June 30, 2024: nil)[84](index=84&type=chunk) [Trade Receivables](index=30&type=section&id=Trade%20Receivables) As of June 30, 2025, total trade receivables increased to **RMB 409 million**, with the majority (**RMB 413 million**) being less than 6 months old, and an impairment provision of **RMB 51.95 million** | Aging | 2025 June 30 (RMB thousand) | 2024 December 31 (RMB thousand) | | :--- | :--- | :--- | | Within 6 months | 412,514 | 341,833 | | 6 months to 1 year | 5,466 | 1,179 | | 1 to 2 years | 1,670 | 10,393 | | 2 to 3 years | 3,954 | 3,823 | | Over 3 years | 36,870 | 34,041 | | Gross Carrying Amount | 460,474 | 391,269 | | Less: Impairment Provision | (51,948) | (49,370) | | **Total Trade Receivables** | **408,526** | **341,899** | [Trade Payables](index=30&type=section&id=Trade%20Payables) As of June 30, 2025, total trade payables increased to **RMB 424 million**, with the vast majority (**RMB 416 million**) due within one year, and typically settled within that period | Aging | 2025 June 30 (RMB thousand) | 2024 December 31 (RMB thousand) | | :--- | :--- | :--- | | Within 1 year | 415,944 | 373,081 | | 1 to 2 years | 94 | 741 | | Over 2 years | 8,265 | 8,735 | | **Total** | **424,303** | **382,557** | - Trade payables are normally settled within one year[86](index=86&type=chunk) Definitions and Acknowledgement [Definitions](index=31&type=section&id=Definitions) This section provides definitions for key terms used in the announcement, such as AIGC, ARPU, and IFRS, ensuring consistent understanding for readers - Provides the meanings of key terms such as AIGC, ARPU, and International Financial Reporting Standards[87](index=87&type=chunk)[88](index=88&type=chunk) [Acknowledgement](index=33&type=section&id=Acknowledgement) Chairman Liu Chunhe extends gratitude to the Group's management, employees, regulators, shareholders, and customers for their contributions and support, with a forward-looking statement disclaimer - Chairman Liu Chunhe, on behalf of the Board, extends gratitude to the Group's management and employees, regulatory bodies, shareholders, and customers[89](index=89&type=chunk) - This announcement contains forward-looking statements regarding the Group's business outlook, financial performance estimates, projected business plans, and development strategies, with a caution that such statements involve numerous risks and uncertainties[90](index=90&type=chunk)

Core Insights - The article highlights the emerging success of the Merge-2 gaming genre, particularly with the introduction of the Chinese horror-themed game "Haunted Merge: Horror Story," which showcases the industry's trend towards diverse themes and innovative gameplay [1][2][10]. Industry Overview - The Merge-2 genre has gained significant traction, surpassing Merge-3 in revenue, with a reported annual income of over 28 billion yuan compared to Merge-3's 20.2 billion yuan [20][22]. - The growth of Merge-2 is evident, with a 43% increase in downloads in 2024, and a doubling of revenue, indicating a strong market demand [22]. Game Analysis - "Haunted Merge" stands out due to its unique theme of Chinese folklore horror, which is relatively niche compared to other offerings in the market [2][4]. - The gameplay involves merging items to solve puzzles and unlock story elements, aligning well with the horror narrative [7][8]. - The game has been launched in five Southeast Asian markets, indicating a strategic choice based on thematic relevance [11]. Company Background - The game is developed by WhaleJoy Game Limited, which is associated with Blue Ultra Game Limited, known for its successful title "Merge Prison" [10][12]. - Blue Ultra was founded in early 2023, with a team experienced in SLG game development, previously involved in titles like "Zgirls" [12][14]. Competitive Landscape - The article identifies several key players in the Merge-2 space, including Lemon Microfun, which has successfully transitioned from Merge-3 to Merge-2, and has multiple successful titles [19][56]. - Other notable companies include Red Child City and Whale Armor Technology, which are also exploring the Merge-2 genre with varying degrees of success [29][35]. Future Outlook - The Merge-2 genre is expected to continue evolving, with a focus on diverse themes and innovative gameplay mechanics, as evidenced by the ongoing development and testing of new titles [57][58]. - The success of "Haunted Merge" could pave the way for further exploration of niche themes within the Merge-2 genre, potentially expanding its audience [1][58].

【#59.9元自助小火锅成巨头新战场#，海底捞杨国福入局】 据每日人物报道，自助小火锅并非新鲜事物，早在几年前，当性价比成为最有效的消费燃料，小火锅就 已顺势沸腾起来。 数据显示，全国目前有约5.1万家小火锅门店。除了有名有姓的品牌，剩下的是默默耕耘的个体老板 们。小火锅的入局门槛低，成为了许多年轻人创业第一站，但却往往不是成功的一站。 混乱的战局中，他们的对手不只是彼此，还有高温中自助菜品保鲜的考验，和外卖疯狂补贴下被越来越 多人放弃的堂食习惯。 现在，这个红火的赛道，又吸引到了新玩家——海底捞、杨国福等餐饮巨头都在今年布局了自助小火锅 店，价格均为59.9元，比此前行业里二三十的单价，要略高一些。#海底捞杨国福入局自助小火锅# ...