IDREAMSKY(HK:01119)2020-09-18 08:31Financial Performance - For the six months ended June 30, 2020, the company's revenue increased by 11.2% year-on-year to RMB 1,591,643,000[6]. - The operating profit for the same period decreased by 5.2%, with an operating profit margin of 15.2%, down 2.6 percentage points from the previous year[7]. - Profit for the six months ended June 30, 2020, decreased by 29.7%, while adjusted net profit fell by 31.0%[6]. - The decline in profit was primarily due to a decrease in revenue from the higher-margin gaming business and increased marketing and R&D expenses[7]. - Revenue increased by 11.2% from RMB 1,431.3 million for the six months ended June 30, 2019, to RMB 1,591.6 million for the six months ended June 30, 2020[18]. - Game revenue contributed 87.2% of total revenue in the six months ended June 30, 2020, amounting to RMB 1,387.7 million, up from RMB 1,261.4 million in the same period of 2019[19]. - The company reported a profit of RMB 178,227 thousand for the six months ended June 30, 2019, which decreased to RMB 136,986 thousand in the current period, reflecting a decline of approximately 23.2%[77]. - The total comprehensive income for the period was RMB 139,831 thousand, which includes a profit of RMB 136,986 thousand, compared to RMB 177,409 thousand in the previous year, indicating a decrease of approximately 21.14%[77]. User Engagement - Average monthly active users rose from 130.1 million in the six months ended June 30, 2019, to 142.0 million in the same period of 2020[7]. - Average monthly paying users increased from 5.8 million to 6.2 million year-on-year[7]. - Average revenue per paying user grew from RMB 31.7 to RMB 35.5 during the same period[7]. - The average monthly active users reached 140 million, representing a year-on-year growth of 9.1%[8]. - The game "Global Action" attracted over 1 million player registrations before its launch and achieved a DAU of several hundred thousand on its first day, ranking first in the RTS category[9]. Strategic Partnerships and Market Position - The company has strengthened partnerships with strategic investors like Tencent and Sony, enhancing user experience through content development and operational integration[10]. - The offline store "Tencent Video Good Times" is the first experiential entertainment retail district in the country, designed in collaboration with Sony PlayStation[10]. - The company was included in the MSCI China All-Cap Small Cap Index in May 2020, indicating strong market recognition and potential[11]. - Greater Bay Area Homeland Investments Limited increased its stake to 7.01%, indicating confidence in the company's growth in the digital creative industry[11]. Expenses and Cost Management - Revenue cost increased by 20.0% from RMB 755.7 million to RMB 906.9 million, with the percentage of revenue cost rising from 52.8% to 57.0%[23]. - Sales and marketing expenses rose by 46.5% from RMB 131.2 million to RMB 192.2 million, accounting for 12.1% of revenue compared to 9.2% previously[24]. - Research and development expenses increased by 17.7% from RMB 95.6 million to RMB 112.5 million, representing 7.1% of revenue, up from 6.7%[26]. - Financing costs surged from RMB 22.7 million to RMB 48.3 million, attributed to an increase in total borrowings from RMB 1,270.4 million to RMB 1,636.8 million[27]. Cash Flow and Liquidity - As of June 30, 2020, total cash and cash equivalents increased by 26.8% to approximately RMB 675.4 million from RMB 532.7 million as of December 31, 2019[35]. - The net cash inflow from operating activities for the six months ended June 30, 2020, was RMB 50,412 thousand, compared to RMB 17,565 thousand for the same period in 2019, representing a significant increase of 187.5%[78]. - The total cash outflow for leases amounted to RMB 55.096 million for the six months ended June 30, 2020[128]. Shareholder Information - As of June 30, 2020, the company had a total of 1,269,718,990 shares issued[50]. - The largest shareholder, Mr. Chen, holds 242,870,430 shares, representing approximately 19.13% of the company's equity[50]. - Tencent Mobility Limited owns 235,999,300 shares, accounting for about 18.59% of the company's equity[55]. - The company did not recommend any interim dividend for the six months ended June 30, 2020 (2019: none)[43]. Future Outlook and Development - The company plans to introduce a series of premium games, including "Little Animal Star" and "Glory," to expand its content matrix[14]. - The cloud gaming market in China is projected to exceed RMB 1 billion in 2020, with an expected annual growth rate of over 100% for the next two years[15]. - The company is collaborating with Tencent Cloud to test multiple games for cloud capabilities, aiming to innovate in the cloud gaming ecosystem[15]. - The company plans to maintain sufficient cash and cash equivalents to ensure financial flexibility in its operations[86]. - The company aims to complete the remaining unutilized net proceeds by the end of 2021[46]. Compliance and Governance - The company established an audit committee primarily composed of independent non-executive directors to oversee financial reporting processes[43]. - The company’s financial performance report must comply with the International Accounting Standard 34 for interim financial reporting[70]. - The company is committed to maintaining compliance with the Securities and Futures Ordinance in Hong Kong[182].