ZENGAME(02660)2023-09-15 08:57Revenue and Profit Growth - Revenue increased by 64.2% year-on-year to RMB 1,017.8 million in the first half of 2023[7] - Net profit rose by 70.6% year-on-year to RMB 404.3 million in the first half of 2023[7] - Adjusted net profit (excluding share-based compensation) grew by 73.3% year-on-year to RMB 413.2 million in the first half of 2023[7] - Total revenue for the six months ended June 30, 2023, was RMB 1,017.8 million, a 64.2% increase compared to RMB 619.8 million in the same period in 2022[17] - Net profit for the six months ended June 30, 2023, increased by 70.6% to RMB 404.3 million, driven by higher revenue from virtual item sales[28] - Adjusted net profit (excluding share-based compensation) increased by 73.3% to RMB 413.2 million for the six months ended June 30, 2023[29] - Revenue for the six months ended June 30, 2023, increased to RMB 1,017.834 million, up from RMB 619.786 million in the same period in 2022[67] - Net profit for the six months ended June 30, 2023, was RMB 404.261 million, up from RMB 236.905 million in the same period in 2022[66] - The company's profit attributable to ordinary equity holders of the parent for the six months ended June 30, 2023, was RMB 404,845,000, compared to RMB 237,010,000 for the same period in 2022, representing a significant increase[95] User Metrics and Engagement - Monthly active users (MAU) decreased to 25,068 in the first half of 2023 from 38,707 in the same period last year[10] - Daily active users (DAU) dropped to 4,404 in the first half of 2023 from 6,288 in the same period last year[10] - Monthly paying users for virtual items declined to 575 in the first half of 2023 from 1,065 in the same period last year[10] - Average revenue per paying user (ARPPU) for virtual items surged to RMB 289 in the first half of 2023 from RMB 82 in the same period last year[10] Game Revenue Breakdown - Revenue from chess games increased by 104.3% year-on-year to RMB 923.2 million in the first half of 2023[10] - Revenue from virtual item sales grew by 100.7% year-on-year to RMB 963.9 million in the first half of 2023[11] - Revenue from virtual item sales increased by 100.7% to RMB 963.9 million, driven by higher ARPPU in chess games[17] - Chess game revenue grew by 104.3% to RMB 923.2 million, accounting for 90.7% of total revenue[16] - Card game revenue decreased by 52.6% to RMB 76.3 million, representing 7.5% of total revenue[16] - Revenue from self-developed games increased to RMB 960,029 thousand in 2023, up from RMB 477,900 thousand in 2022, representing a significant growth[81] - Revenue from game information services decreased to RMB 53,911 thousand in 2023 from RMB 139,553 thousand in 2022[81] Expenses and Costs - Gross profit increased by 59.1% to RMB 635.7 million, with a slight decline in gross margin from 64.5% to 62.5%[19] - Sales and distribution expenses decreased by 10.8% to RMB 73.4 million, primarily due to reduced promotion and advertising costs[22] - R&D expenses increased by 47.7% to RMB 73.8 million, driven by higher headcount and salaries for R&D personnel[24] - R&D costs for the six months ended June 30, 2023, increased to RMB 73.840 million, compared to RMB 49.983 million in the same period in 2022[67] - Administrative expenses for the six months ended June 30, 2023, were RMB 60.690 million, up from RMB 37.124 million in the same period in 2022[67] - Service fees charged by distribution platforms and payment providers increased to RMB 278,109 thousand in 2023 from RMB 157,614 thousand in 2022[89] - Current tax expenses for the period amounted to RMB 76,097 thousand in 2023, compared to RMB 26,547 thousand in 2022[92] - Deferred tax benefits were RMB 18,442 thousand in 2023, compared to RMB 9,129 thousand in 2022[92] Financial Position and Assets - Bank balances and cash increased to approximately RMB 1.4 billion as of June 30, 2023, up from RMB 1.1 billion as of December 31, 2022, due to increased operating profits[31] - Current assets as of June 30, 2023, were approximately RMB 1,934.6 million, including cash and cash equivalents of RMB 1,413.0 million, trade receivables of RMB 179.3 million, and financial assets at fair value of RMB 253.2 million[32] - Total assets increased to RMB 1,991,510 thousand as of June 30, 2023, compared to RMB 1,765,760 thousand at the end of 2022[70] - Cash and cash equivalents rose significantly to RMB 1,209,311 thousand, up from RMB 977,230 thousand at the end of 2022[70] - Investments in associates grew substantially to RMB 25,426 thousand, compared to RMB 7,003 thousand at the end of 2022[70] - Current assets increased to RMB 1,934,605 thousand, up from RMB 1,534,333 thousand at the end of 2022[70] - Current liabilities rose to RMB 464,499 thousand, compared to RMB 262,697 thousand at the end of 2022[70] - Non-current liabilities decreased to RMB 2,209 thousand, down from RMB 22,199 thousand at the end of 2022[70] - Equity attributable to owners of the parent company increased to RMB 2,005,086 thousand, up from RMB 1,778,774 thousand at the end of 2022[70] - Retained earnings grew to RMB 1,874,073 thousand, compared to RMB 1,668,865 thousand at the end of 2022[71] - Foreign exchange fluctuation reserve improved to RMB 6,626 thousand, up from a negative RMB 8,625 thousand at the end of 2022[71] - Share capital increased slightly to RMB 9,066 thousand, compared to RMB 9,044 thousand at the end of 2022[71] - Total equity as of June 30, 2023, was RMB 1,225,222 thousand[72] - Retained earnings amounted to RMB 1,089,252 thousand[72] - The company's total financial assets as of June 30, 2023, amounted to RMB 2,350,813 thousand, including RMB 253,209 thousand in financial assets at fair value through profit or loss[114] - The company's cash and cash equivalents as of June 30, 2023, stood at RMB 1,209,311 thousand[114] - The company's financial liabilities as of June 30, 2023, totaled RMB 36,853 thousand, including RMB 12,000 thousand in interest-bearing bank borrowings[114] - The company's trade receivables as of June 30, 2023, were RMB 179,332 thousand[114] - The company's total financial assets as of December 31, 2022, were RMB 1,968,379 thousand, with RMB 210,885 thousand in financial assets at fair value through profit or loss[117] - The company's cash and cash equivalents as of December 31, 2022, were RMB 977,230 thousand[117] - The company's financial liabilities as of December 31, 2022, totaled RMB 41,918 thousand, including RMB 13,500 thousand in interest-bearing bank borrowings[118] - The company's trade receivables as of December 31, 2022, were RMB 161,763 thousand[117] - The company's equity investments at fair value through other comprehensive income as of June 30, 2023, were RMB 15,560 thousand[114] Shareholder and Equity Information - Ye Sheng holds a 22.49% stake in the company through controlled entities and personally owns 0.63% of the shares[45] - Yang Min holds a 19.18% stake in the company through controlled entities and personally owns 0.63% of the shares[45] - Xiong Mi beneficially owns 0.30% of the company's shares[45] - Ye Sheng holds a 24.68% stake in Zenyou Shenzhen through controlled entities[47] - Yang Min holds a 21.65% stake in Zenyou Shenzhen through controlled entities[47] - Sky-zen Capital Limited holds 231,712,000 shares, representing 22.49% of the company's total shares[49] - J&L Y Limited holds 197,604,100 shares, representing 19.18% of the company's total shares[49] - D Fun Limited holds 160,143,300 shares, representing 15.55% of the company's total shares[49] - Playa Technology Limited holds 90,860,920 shares, representing 8.82% of the company's total shares[49] - The total number of issued shares as of June 30, 2023, is 1,030,124,687 shares[51] - A total of 62,561,080 restricted share units were granted under the Restricted Share Unit Plan, representing approximately 6.07% of the total issued shares as of June 30, 2023[53] - No restricted share units were available for grant under the Restricted Share Unit Plan as of June 30, 2023[53] - No restricted share units were available for exercise as of June 30, 2023[53] - The Restricted Share Unit Plan will no longer grant any restricted share units[55] - The company has 84,000,000 share options available for grant under the share option plan as of June 30, 2023, representing approximately 9.26% of the total issued shares[56] - A total of 13,833,750 share options were granted under the share option plan, with 2,393,000 exercised and 266,250 expired/cancelled during the six months ended June 30, 2023[57] - The weighted average closing price of shares immediately before the exercise date of share options was HK24.3 million, calculated based on the closing price of HK$1.32 per share at the grant date[61] - The company did not grant, exercise, lapse, or cancel any restricted shares during the six months ended June 30, 2023[62] - The weighted average number of shares that could be issued under the share option and share award plans during the six months ended June 30, 2023, was 0%[62] - The company's issued and fully paid ordinary shares as of June 30, 2023, were 1,030,124,687, compared to 1,027,731,687 as of December 31, 2022[106] - The company issued 2,393,000 shares upon the exercise of share options at a subscription price of HKD 1.29 per share, resulting in a total cash consideration of HKD 3,087,000 (approximately RMB 2,846,000)[108] Cash Flow and Financial Activities - Net cash flow from operating activities for the six months ended June 30, 2023, was RMB 358,055 thousand[73] - Profit before tax for the six months ended June 30, 2023, was RMB 461,916 thousand[73] - Interest income for the six months ended June 30, 2023, was RMB 25,828 thousand[73] - Depreciation of property and equipment for the six months ended June 30, 2023, was RMB 2,362 thousand[73] - Amortization of other intangible assets for the six months ended June 30, 2023, was RMB 452 thousand[73] - Share-based payment expenses for the six months ended June 30, 2023, were RMB 8,893 thousand[73] - Impairment of prepayments, deposits, and other receivables for the six months ended June 30, 2023, was RMB 10,000 thousand[73] - Increase in contract liabilities for the six months ended June 30, 2023, was RMB 24,840 thousand[73] - Net cash used in investing activities was RMB 140,956 thousand, compared to RMB 75,488 thousand in the same period last year[74] - Cash and cash equivalents increased by RMB 216,830 thousand, reaching RMB 1,209,311 thousand at the end of the period[74] - Interest received from investments was RMB 15,638 thousand, a significant increase from RMB 2,006 thousand in the previous year[74] - The company invested RMB 19,500 thousand in associates, compared to no investment in the same period last year[74] - Cash flow from financing activities showed a net outflow of RMB 269 thousand, a significant improvement from the net outflow of RMB 14,484 thousand in the previous year[74] Corporate Governance and Management - The company maintains a high standard of corporate governance, with the Board of Directors ensuring compliance with the Corporate Governance Code, except for a deviation under Code Provision C.2.1[37] - Li Chengwei was appointed as a senior management member of the group, responsible for the overall management and business planning of the chess and card game products department[41] - The group had approximately 520 employees as of June 30, 2023, with no major labor disputes reported during the first half of 2023[43] Taxation and Dividends - Income tax expenses increased by approximately RMB 40.2 million or 231.0% to RMB 57.7 million for the six months ended June 30, 2023, primarily due to reduced tax benefits and a 5% withholding tax rate for the Hong Kong subsidiary[27] - No interim dividend was recommended for the six months ended June 30, 2023, while a final dividend of HKD 0.21 per share for the year ended December 31, 2022, was approved and paid[36] - The company did not recommend any interim dividend for the six months ended June 30, 2023[93] Fair Value Measurements - The fair value of financial assets measured at fair value through profit or loss as of June 30, 2023, was RMB 253,209,000, compared to RMB 210,885,000 as of December 31, 2022[102] - The fair value of financial assets measured at fair value through profit or loss was RMB 253,209 thousand as of June 30, 2023, with no significant observable inputs (Level 2)[123] - The fair value of equity investments designated at fair value through other comprehensive income was RMB 15,560 thousand as of June 30, 2023, with significant unobservable inputs (Level 3)[123] - The total fair value of financial assets measured at fair value was RMB 268,769 thousand as of June 30, 2023[123] - The fair value of equity investments designated at fair value through other comprehensive income decreased by RMB 13,050 thousand due to losses recognized in other comprehensive income during the reporting period[126] - The discount rate for lack of marketability, a significant unobservable input for fair value measurement of non-listed equity investments, remained at 30% as of June 30, 2023[127] - The fair value of financial assets measured at fair value through profit or loss was RMB 210,885 thousand as of December 31, 2022, with significant observable inputs (Level 2)[124] - The fair value of equity investments designated at fair value through other comprehensive income was RMB 26,610 thousand as of December 31, 2022, with significant unobservable inputs (Level 3)[124] - The total fair value of financial assets measured at fair value was RMB 237,495 thousand as of December 31, 2022[124] Other Financial Information - Capital expenditure for the six months ended June 30, 2023, was approximately RMB 21.8 million, primarily used for game development and operations[33] - The company has no significant contingent liabilities or pledged assets as of June 30, 2023[33][34] - The company faces foreign exchange risk due to cash and bank balances denominated in USD and HKD, with no current hedging policy in place[35] - The company adopted new and revised Hong Kong Financial Reporting Standards, including amendments to HKAS 1, HKAS 8, and HKAS 12, with no material impact on financial statements[76][77] - The company operates primarily in the mobile game development and operation sector, with no further segmental information reported[78] - All revenue and long-term assets/capital expenditures are generated from and located in China, with no geographical segment information provided[79] - The total property and equipment as of June 30, 2023, had a net book value of RMB 7,817,000, compared to RMB 9,833,000 as of January 1, 2023[96] - Trade receivables within 90 days as of June 30, 2023, amounted to RMB 175,096,000, compared to RMB 155,924,000 as of December 31, 2022[101] - Trade payables within 3 months as of June 30, 2023, amounted to RMB 17,866,000, compared to RMB 16,490,000 as of December 31,