FIRE ROCK(HK:01909)2020-09-04 08:50Financial Performance - The company reported an interim revenue of HKD 50 million for the six months ended June 30, 2020, representing a 20% increase compared to the same period last year[35]. - For the six months ended June 30, 2020, the company's revenue increased by approximately 177.4% to approximately RMB 285.2 million from approximately RMB 102.8 million for the same period in 2019[36]. - Gross profit for the same period rose by approximately 177.7% to approximately RMB 267.4 million, compared to approximately RMB 96.3 million in the prior year[36]. - Profit for the six months ended June 30, 2020, surged by approximately 214.4% to approximately RMB 192.7 million from approximately RMB 61.3 million in the previous year[37]. - The company reported a net profit margin of 15% for the first half of 2020, maintaining a stable profitability level[35]. - Revenue for the six months ended June 30, 2020, was RMB 285,156,409, a significant increase from RMB 102,823,278 in the same period of 2019, representing a growth of approximately 177%[198]. - Gross profit for the same period was RMB 267,351,160, compared to RMB 96,285,255 in 2019, indicating a substantial increase in profitability[198]. - Operating profit reached RMB 234,045,109, up from RMB 80,831,074 in the previous year, reflecting a growth of approximately 189%[198]. - Net profit for the period was RMB 192,680,447, compared to RMB 61,292,843 in 2019, marking an increase of about 214%[198]. - Basic and diluted earnings per share were RMB 60.00, a significant rise from RMB 19.17 in the same period last year[198]. - The company reported a total comprehensive income of RMB 200,261,819 for the period, compared to RMB 62,015,376 in 2019, showing a growth of approximately 222%[198]. - The company incurred income tax expenses of RMB 41,364,662, up from RMB 19,932,694 in the previous year, reflecting an increase in tax obligations due to higher profits[198]. User Engagement and Growth - The average monthly paying users (MPU) increased to 15,000, a growth of 25% year-on-year[35]. - User engagement metrics showed a 30% increase in daily active users (DAU) compared to the previous year[35]. - Revenue from mobile games was approximately RMB 273.0 million, representing a year-on-year growth of approximately 170.3%, accounting for 95.7% of total revenue[42]. - Revenue from the "Fishing Battle" game series was approximately RMB 114.4 million, accounting for about 40.1% of total revenue for the six months ended June 30, 2020[49]. - The "Snack Battle" game series generated approximately RMB 80.8 million, representing about 28.3% of total revenue during the same period[49]. - The increase in revenue was primarily driven by multiple mobile games launched between 2017 and 2019, including "Snack Battle," "Fishing Battle," "Royal Tycoon," and "Super Whack-a-Mole" series[68]. - The company has five game series in development, including "Battle Cell" and "Intelligent Pinball," with expected launch dates in 2021[58][59]. Strategic Plans and Investments - The company plans to launch two new mobile games in Q4 2020, aiming to capture a larger market share in the mobile gaming sector[35]. - The company is exploring potential acquisitions to expand its portfolio and enhance its market presence in Asia[35]. - The expansion strategy includes targeting Southeast Asian markets, which are expected to contribute significantly to future revenue growth[35]. - The company aims to expand its overseas market presence while consolidating its position in major global markets[62]. - The company will actively seek strategic investment and acquisition opportunities to enhance revenue stability and diversity[63]. - The company plans to continue expanding its game offerings and enhancing its operational capabilities to drive future growth[93]. Research and Development - The company is investing in new technology development to improve game performance and user experience[35]. - The company continues to focus on R&D for web and mobile games to enhance its competitive edge in the industry[41]. - The company plans to enhance R&D capabilities to develop higher quality and innovative mobile games, utilizing H5 technology and other new technologies[62]. - The company will continue to invest significant resources in the R&D of mobile games to meet player preferences and demands[62]. - The company has developed and licensed two software products, "Fire Element Mobile Software General Framework" and "Fire Element Integration Workbench System," to partners and other enterprises[48]. - The company has two software products in development, including "Landlord Game AI System" and "Game Backend Management System," expected to launch in 2020[58][59]. Financial Position and Capital Management - Cash and cash equivalents as of June 30, 2020, were approximately RMB 459.9 million, up from RMB 248.5 million as of December 31, 2019[116]. - The company's debt ratio as of June 30, 2020, was approximately 7.3%, down from 10.5% as of December 31, 2019[123]. - The total capital expenditure for the six months ended June 30, 2020, was approximately RMB 0.6 million, consistent with the same period in 2019[117]. - Total employee compensation for the six months ended June 30, 2020, was approximately RMB 10.4 million, an increase from RMB 9.6 million in the same period of 2019[130]. - The group has utilized approximately HKD 26.0 million of the net proceeds from the placement, with HKD 7.2 million allocated for developing new mobile games and HKD 7.2 million for new web games[141]. Corporate Governance and Compliance - The board of directors did not recommend the payment of an interim dividend for the six months ended June 30, 2020[37]. - The group has established a compensation committee to regularly review and make recommendations regarding the compensation and incentives for directors and senior management[131]. - The group aims to maintain a competitive compensation package and benefits for employees to ensure core competitiveness in a highly competitive industry[131]. - The company has adopted the "Code of Conduct for Directors' Securities Transactions" as per the listing rules, ensuring compliance among all directors[152]. - All directors confirmed compliance with the trading guidelines during the reporting period up to June 30, 2020[152]. - The company maintains a register of interests in accordance with the Securities and Futures Ordinance, ensuring transparency in shareholdings[156]. - The report indicates no other directors or senior management hold any interests or short positions in the company's shares as of June 30, 2020[160]. Share Capital and Ownership - Mr. Zhang Yan holds approximately 38.75% of the total issued shares, equating to 124,000,000 shares[159]. - Mr. Zhang Yan's holdings include 109,000,000 shares, representing about 34.06% of the company's total share capital, in Safron International Limited[167]. - Additionally, Mr. Zhang Yan owns 15,000,000 shares, which is approximately 4.69% of the company's total share capital, in Infinities Investment Pte. Ltd.[167]. - Mr. Huang Yong holds 13,592,000 shares, accounting for 4.25% of the company's total share capital[163]. - Mr. Wu Zhe possesses 3,320,000 shares, which is about 1.04% of the company's total share capital[163]. - Mr. Rao Zhenwu has 1,600,000 shares, representing 0.50% of the company's total share capital[163]. - As of June 30, 2020, the total number of shares available for issuance under the share option plan is 16,000,000 shares, accounting for 5% of the company's issued share capital[176]. - The company's authorized share capital is HKD 20,000,000, divided into 2,000,000,000 shares with a par value of HKD 0.01 each, of which 320,000,000 shares are issued and fully paid[194]. - On July 28, 2020, the board proposed a share split, converting each existing share with a par value of HKD 0.01 into three shares with a par value of HKD 0.00333[194]. - The share split was approved at a special general meeting held on August 17, 2020, and became effective on August 19, 2020[194]. Market and Revenue Sources - Revenue from self-operated games was RMB 27.2 million, accounting for 9.5% of total online gaming revenue, while licensed operator revenue was RMB 246.5 million, making up 86.5%[72]. - Revenue from the Chinese market was RMB 257.4 million, representing 90.3% of total revenue, compared to RMB 102.3 million or 99.5% in the same period of 2019[76]. - Mobile game revenue constituted 99.8% of total online gaming revenue in 2020, amounting to RMB 273.0 million, up from 98.2% in 2019[77]. - The company reported that its revenue sources include licensing fees, revenue sharing from operators, and virtual goods sales from players[67]. - Online gaming revenue for the first half of 2020 reached RMB 273.7 million, a significant increase from RMB 102.8 million in the same period of 2019, representing a growth of approximately 166.5%[72].