HOMELAND ITL(03798)2024-09-16 04:17Market Expansion and Strategy - Overseas markets such as Southeast Asia, Japan, North America, and the Middle East will be explored further, with new casual social games expected to launch soon[8] - The company plans to deepen regional market penetration and increase marketing efforts in underdeveloped areas in China[10] - New marketing channels, including collaborations with MCNs and influencers, will be explored to reduce customer acquisition costs[11] - Increased R&D investment will focus on preparing and launching new products for both domestic and overseas markets[12] - The company aims to identify potential business opportunities through partnerships, acquisitions, and investments in promising R&D teams[13] Financial Performance - Revenue decreased by 12.4% to RMB 835.7 million in the first half of 2024 compared to RMB 953.5 million in the same period of 2023, primarily due to a decrease in ARPPU despite a 70.0% increase in paying users[14] - Revenue breakdown for the first half of 2024: 91.2% from virtual token sales, 6.4% from third-party mobile game distribution, and 2.4% from advertising, compared to 85.9%, 9.9%, and 4.2% respectively in the same period of 2023[14] - Cost of sales increased by 35.2% to RMB 422.7 million in the first half of 2024, driven by higher commissions to third-party distribution channels, increased new media costs, and higher employee benefits[15] - Gross profit decreased by 35.6% to RMB 413.0 million, with gross margin dropping from 67.2% in the first half of 2023 to 49.4% in the first half of 2024[16] - Selling and marketing expenses surged by 101.4% to RMB 261.1 million in the first half of 2024, mainly due to increased advertising and marketing expenditures to maintain market share[20] - Profit before tax plummeted by 91.0% to RMB 40.3 million in the first half of 2024, with the profit margin declining from 47.1% to 4.8%[22] - Net profit attributable to owners of the company dropped by 92.9% to RMB 28.0 million in the first half of 2024[24] - The company's adjusted net profit attributable to owners for the six months ended June 30, 2024, was approximately RMB 42.0 million, a significant decrease of 90.6% compared to RMB 445.6 million for the same period in 2023[26] - Revenue for the six months ended June 30, 2024, decreased to RMB 835.659 million from RMB 953.477 million in the same period in 2023, representing a decline of approximately 12.4%[37] - Gross profit for the six months ended June 30, 2024, was RMB 412.968 million, down from RMB 640.840 million in 2023, a decrease of approximately 35.5%[37] - Net profit attributable to the company's owners for the six months ended June 30, 2024, was RMB 28.009 million, a significant drop from RMB 395.293 million in 2023, representing a decline of approximately 92.9%[38] - Basic earnings per share for the six months ended June 30, 2024, were RMB 0.0223, compared to RMB 0.3098 in 2023, a decrease of approximately 92.8%[38] - The company's profit attributable to owners for the six months ended June 30, 2024, was RMB 28,009 thousand, a significant decrease from RMB 395,293 thousand in the same period in 2023[63] Cash Flow and Capital Expenditures - Cash and cash equivalents as of June 30, 2024, were approximately RMB 1,028.7 million, down from RMB 1,340.9 million as of December 31, 2023[28] - Capital expenditures for the six months ended June 30, 2024, were approximately RMB 261.3 million, a significant increase from RMB 71.2 million in the same period in 2023[31] - Net cash generated from operating activities was RMB 12,162, compared to RMB 182,951 in the same period last year[47] - Net cash used in investing activities was RMB 309,147, primarily due to purchases of financial assets and investments in associates and joint ventures[47] - Net cash used in financing activities was RMB 16,926, including RMB 10,894 for share repurchases[47] - Cash and cash equivalents decreased by RMB 313,911, ending the period at RMB 1,028,691[47] Shareholder and Equity Information - The company had no short-term or long-term bank borrowings as of June 30, 2024, except for lease liabilities totaling RMB 20.5 million[29] - The company's debt-to-asset ratio was zero as of June 30, 2024, indicating no debt[30] - Total assets as of June 30, 2024, were RMB 2.010 billion, slightly up from RMB 1.887 billion as of December 31, 2023[39] - Current liabilities as of June 30, 2024, increased to RMB 304.944 million from RMB 190.164 million as of December 31, 2023, representing an increase of approximately 60.3%[39] - Net current assets as of June 30, 2024, were RMB 1.705 billion, slightly up from RMB 1.697 billion as of December 31, 2023[39] - Total equity as of June 30, 2024, was RMB 2.003 billion, down from RMB 2.084 billion as of December 31, 2023, representing a decrease of approximately 3.9%[40] - Non-current liabilities as of June 30, 2024, were RMB 12.863 million, slightly up from RMB 12.602 million as of December 31, 2023[40] - The company's net asset value as of June 30, 2024, was RMB 2.003 billion, down from RMB 2.084 billion as of December 31, 2023, representing a decrease of approximately 3.9%[40] - Dividends distributed during the period amounted to RMB 117.226 million[44] - Share-based payment expenses under the 2024 share incentive plan were RMB 13.808 million[44] - Share repurchases during the period totaled RMB 10.894 million[44] - Total equity as of January 1, 2024, was RMB 2,084.150 million, with a net profit of RMB 28.009 million for the period[44] - Share-based payment expenses under the 2021 share incentive plan were RMB 142,000[44] - Total equity as of June 30, 2023, was RMB 2,050.575 million, with a net profit of RMB 402.557 million for the period[43] - Share-based payment expenses under the 2023 share incentive plan were RMB 27.152 million[43] - Dividends distributed during the period amounted to RMB 162.823 million[43] - Total equity increased to 5,164,000 from 11,982 during the six months ended June 30, 2024[45] - The company received a donation of 32,085,086 shares from two shareholders, with a fair value of RMB 64,790,000[45] - The company repurchased 5,164,000 shares at prices ranging from HKD 1.915 to HKD 2.684, with a total cost of RMB 10,893,569 (HKD 11,982,260)[45] - The company declared a final dividend of HKD 0.10 per share, totaling HKD 128.3 million, compared to HKD 0.14 per share in the previous period[57] Share Incentive Plans and Awards - The company's share-based payment plan allows for the issuance of up to 10% of the total issued shares as of the listing date, which is 125,600,000 shares[86] - On November 14, 2019, the company granted options to 58 eligible employees to subscribe for a total of 62,360,000 ordinary shares with a fair value of HKD 47,452,000 (RMB 42,508,000)[87] - The exercise price for the granted options is HKD 2.09 per share, with vesting periods of 30% on November 14, 2020, 40% on November 14, 2021, and 30% on November 14, 2022[87] - As of September 30, 2021, 1,600,000 options were forfeited due to the termination of employment of two grantees, and 60,760,000 options remained unexercised[87] - The company compensated the remaining option holders with share awards, with compensation ratios of 0.35, 0.5, and 0.8333 shares per unexercised option[88] - 26 remaining option holders received 9,278,500 compensation shares for 26,510,000 unexercised options at a ratio of 0.35 shares per option[88] - 29 remaining option holders received 16,525,000 compensation shares for 33,050,000 unexercised options at a ratio of 0.5 shares per option[88] - 1 remaining option holder received 1,000,000 compensation shares for 1,200,000 unexercised options at a ratio of approximately 0.8333 shares per option[88] - A total of 26,803,500 compensation share awards were granted as compensation for the cancellation of unexercised existing share options[89] - 40% of the total share awards will vest on April 30, 2022, 30% on April 30, 2023, and 30% on April 30, 2024[89] - For the vesting on April 30, 2024, the company's consolidated revenue for the year ending December 31, 2023, should increase by at least 20% compared to the year ending December 31, 2020[89] - 5,343,000 shares vested during the period ending June 30, 2024, with 195,000 shares forfeited[91] - The fair value increase of HKD 7,710,000 will be amortized over the vesting periods ending April 30, 2022, April 30, 2023, and April 30, 2024, at 40%, 30%, and 30% respectively[92] - The company recognized share-based payment expenses of RMB 142,000 for the period ending June 30, 2024[92] - 600,000 share awards were granted under the 2021 Share Award Plan to two grantees on September 30, 2021[93] - For the 2021 Share Award Plan, 40% of the total share awards will vest on April 30, 2022, 30% on April 30, 2023, and 30% on April 30, 2024[93] - The company's operating profit should account for at least 75% of the total profit for the year ending December 31, 2023, for the vesting on April 30, 2024[93] - The company recognized share-based payment expenses of RMB 43,000 related to the 2021 Share Award Plan for the period ending June 30, 2024, compared to RMB 102,000 for the same period in 2023[95] - The 2023 Share Award Plan granted 19,311,675 shares to 21 grantees, with share-based payment expenses of RMB 27,152,000 recognized for the period ending June 30, 2023[96] - The 2024 Share Award Plan granted a total of 7,006,454 shares to 23 grantees, with share-based payment expenses of RMB 13,808,000 recognized for the period ending June 30, 2024[97] - The fair value of the company's 5% equity in Spirejoy Pte. Ltd. increased to RMB 2,999,000 as of June 30, 2024, from RMB 1,499,000 as of December 31, 2023[99] - The fair value of the company's equity securities listed on the Shanghai Stock Exchange decreased to RMB 19,144,000 as of June 30, 2024, from RMB 34,819,000 as of December 31, 2023[99] - The fair value of the company's private equity funds increased to RMB 130,824,000 as of June 30, 2024, from RMB 62,599,000 as of December 31, 2023[99] - The company's 10% equity in a partnership investing in consumer, enterprise services, and entertainment sectors was valued at RMB 31,243,000 as of June 30, 2024, slightly down from RMB 31,532,000 as of December 31, 2023[99] - No gains or losses were recognized in other comprehensive income for unlisted equity instruments classified as fair value through other comprehensive income during the period ending June 30, 2024, compared to a loss of RMB 3,333,000 for the same period in 2023[101] - Total revenue for the six months ended June 30, 2024, reached RMB 127,215 thousand, compared to RMB 38,615 thousand in the same period in 2023, representing a significant increase[103] - Advertising and promotion services revenue from Guangzhou Keyang amounted to RMB 56,145 thousand, a new addition compared to the previous year[103] - Game operation costs for Guangzhou Keyang were RMB 19,288 thousand, a new expense item for the period[103] - The company recorded a gain of RMB 9,032 thousand from the sale of assets, including mobile game R&D results and property, plant, and equipment, to Shenzhen Keyang[105] - Loans to associates increased to RMB 111,102 thousand as of June 30, 2024, up from RMB 80,000 thousand at the end of 2023[106] - Total compensation for key management personnel, including salaries, bonuses, and stock-based payments, was RMB 8,327 thousand for the six months ended June 30, 2024, down from RMB 30,786 thousand in the same period in 2023[108] - Mr. Wu Chengze holds a 33.80% equity interest in the company through his controlled entity, Wu Chengze Network Limited[110] - Wu Chengze Network Limited holds a beneficial interest of 33.80% in the company's shares, amounting to 433,842,000 shares[116] - Xiamen Challenger Venture Capital Partnership holds a controlled corporate interest of 5.52% in the company's shares, amounting to 70,840,000 shares[116] - Jiang Ming Kuan Network Limited holds a beneficial interest of 6.61% in the company's shares, amounting to 84,885,000 shares[116] - Zhang Na holds a beneficial interest of 5.25% in the company's shares, amounting to 67,414,500 shares, and a spousal interest of 5.31%, amounting to 68,112,838 shares[116] - The company's share incentive plan allows for the issuance of up to 10% of the total issued shares, which is 125,600,000 shares, or a higher limit as permitted by the stock exchange[119] - The total number of shares that can be issued upon the exercise of all options under the share incentive plan and other plans shall not exceed 30% of the total issued shares at any time[119] - The company's subsidiary, Hometown Interactive (Xiamen) Network Technology Co., Ltd., has a registered capital of RMB 10,000,000, with Wu Chengze holding a 100% interest through Jilin Yutai Network Technology Co., Ltd.[112][114] - Su Bo holds an 18.4% interest in Hometown Interactive (Xiamen) Network Technology Co., Ltd. through Jilin Yutai Network Technology Co., Ltd.[112] - The company's share incentive plan requires a payment of HKD 1.00 for the acceptance of granted options, which is non-refundable and not considered as part of the exercise price[119] - The company's share incentive plan stipulates that no further options can be granted to a qualified person if the total number of shares issued or to be issued exceeds 1% of the total issued shares, unless approved by shareholders at a general meeting[119] - No share options were granted/exercised/cancelled/expired under the share option plan as of June 30, 2024[120] - The share option plan has a remaining validity period of approximately 5 years as of June 30, 2024[120] - The company can grant up to 63,240,000 share options under the share option plan as of both January 1, 2024 and June 30, 2024[120] - The share incentive plan has a remaining validity period of approximately 4 years and 10 months as of June 30, 2024[122] - The maximum number of new shares that can be issued under the share incentive plan in any fiscal year is 3% of the total issued shares[122] - The maximum number of new shares that can be issued to selected participants under the share incentive plan in any 12-month period is 1% of the total issued shares[122] - The company did not grant any share options or share incentives that required the issuance of new shares in the six months ended June 30, 2024[123] - As of December 31, 2022, the total number of unvested share incentives under the share incentive plan was 13,038,000[124] - In 2022, the company granted a total of 49,345,449 share incentives under the share incentive plan[124] - The share incentives granted in 2022 had a vesting period from April