FORGAME(HK:00484)2024-09-26 08:45Financial Performance - The company reported a total revenue of approximately RMB 37.4 million for the first half of 2024, representing a 60.1% increase compared to the same period last year[11]. - Gross profit decreased to RMB 2.94 million, down 54.5% from RMB 6.46 million in the previous year[6]. - The loss for the period was RMB 3.75 million, which is a 14.2% increase from the loss of RMB 3.28 million in the same period last year[6]. - EBITDA for the period was RMB 14.06 million, an 18.9% increase from RMB 11.83 million in the previous year[6]. - Adjusted EBITDA showed a significant decline, reaching RMB (32.83) million, compared to a positive RMB 6.36 million in the previous year, indicating a 508% change[6]. - Total revenue for the first half of 2024 was approximately RMB 37.4 million, an increase of 60.1% compared to RMB 23.4 million in the same period of 2023[20]. - Revenue from the game business increased by approximately 15.3% to RMB 7.2 million for the first half of 2024 from RMB 6.3 million in the same period of 2023, mainly due to new game launches[22]. - Revenue from the electronic device and semiconductor business increased by approximately 76.5% to RMB 30.2 million for the first half of 2024 from RMB 17.1 million in the same period of 2023, driven by sales growth of memories and hard disk drives[21]. - Cost of revenue increased by approximately 103.9% to RMB 34.5 million for the first half of 2024 from RMB 16.9 million in the same period of 2023, in line with revenue growth[21]. - Selling and marketing expenses surged by approximately 614.0% to RMB 9.6 million for the first half of 2024 from RMB 1.3 million in the same period of 2023, attributed to the assembly of a new game business team[23]. - Administrative expenses rose by approximately 33.3% to RMB 18.6 million for the first half of 2024 from RMB 13.9 million in the same period of 2023, primarily due to increased allowances for inventories[23]. - Research and development expenses increased by approximately 9.5% to RMB 24.0 million for the first half of 2024 from RMB 21.9 million in the same period of 2023, reflecting increased investment in the game business[24]. - Other income decreased by approximately 65.6% from RMB 5.1 million for the first half of 2023 to RMB 1.8 million for the first half of 2024, mainly due to reduced interest from debt investments[24]. - Other gains-net increased by approximately 153.4% from RMB 18.0 million for the first half of 2023 to RMB 45.7 million for the first half of 2024, primarily due to gains from the disposal of investments[24]. - Loss for the period increased by approximately 14.2% to RMB 3.7 million for the first half of 2024 from RMB 3.3 million in the same period of 2023[25]. - The Group's total equity decreased from RMB 590.3 million as of December 31, 2023, to RMB 576.2 million as of June 30, 2024, primarily due to changes in the fair value of equity investments[30]. - Total cash and cash equivalents decreased from RMB 195.9 million as of December 31, 2023, to RMB 129.3 million as of June 30, 2024, primarily due to increased investments[30]. - The Group reported a total comprehensive loss of RMB 28,545 for the six months ended June 30, 2024[84]. - The company reported a loss before income tax of RMB 3,748,000, compared to a loss of RMB 3,279,000 in 2023[80]. - The basic loss per share for the six months ended June 30, 2024, was RMB (0.03), compared to RMB (0.02) for the same period in 2023, indicating a 50% increase in loss per share[144]. Assets and Liabilities - Total assets as of June 30, 2024, were RMB 629.24 million, a decrease of 4.0% from RMB 655.77 million at the end of 2023[9]. - Total equity decreased to RMB 576.21 million, down 2.4% from RMB 590.27 million at the end of 2023[9]. - Non-current liabilities decreased by 19.7% to RMB 1.03 million from RMB 1.28 million[9]. - Current liabilities decreased by 19.0% to RMB 52.01 million from RMB 64.21 million[9]. - Net current assets decreased from RMB 390.2 million as of December 31, 2023, to RMB 375.4 million as of June 30, 2024, attributed to an increase in investments at fair value[30]. - Total liabilities decreased to RMB 53,038 as of June 30, 2024, down 19.0% from RMB 65,491 as of December 31, 2023[83]. - Current liabilities decreased to RMB 52,008 as of June 30, 2024, down from RMB 64,209 as of December 31, 2023[83]. - The company’s net current assets as of June 30, 2024, are RMB 375,389, a decrease from RMB 390,233 as of December 31, 2023[83]. - The Group's inventory as of June 30, 2024, was RMB 13,773,000, down from RMB 16,245,000 as of December 31, 2023, indicating a decrease of about 15.1%[148]. - The carrying amount of trade receivables decreased significantly to RMB 7,352,000 as of June 30, 2024, from RMB 66,352,000 as of December 31, 2023, representing a decline of approximately 88.9%[149]. Investments and Acquisitions - The Group held one significant investment, Beijing Share Times Technology Co., Limited, valued at RMB 28.241 million, representing 8.85% of the Group's total assets as of June 30, 2024[38]. - The Group's significant investment in Share Times had a fair value of RMB 58.291 million as of June 30, 2024, which is 9.26% of the Group's total assets[38]. - On September 10, 2024, the Group's subsidiary Netcloud agreed to acquire 95.0769% of Shenzhen Haihong Microelectronics Technology Co., Limited for RMB 22.80 million[44]. - The acquisition was completed on September 19, 2024, and the financial results of the Target Company will be consolidated into the Group's financial statements[44]. - The Group continues to support the business development of Share Times and seeks synergies with other investments to maximize performance[38]. - The Group reported a significant investment-related loss of RMB 13,520,000 during the period, compared to a loss of RMB 22,720,000 in the previous year[127]. Operational Strategies - The company is actively exploring new game development and electronic trade products to adapt to market changes and enhance operational management[11]. - In the second half of 2024, the Group aims to enhance its existing game business and stimulate game product upgrades to stabilize and increase game revenue[50]. - The Group plans to develop its electronic device and semiconductor business steadily to ensure healthy cash flow and optimize supply chain management[50]. - The Group will strictly control budgets, reduce operating costs, and improve management efficiency to enhance profitability[50]. - The Group will actively seek to diversify revenue while controlling risks to enhance overall profitability[51]. - The Group is exposed to various risks, including industry policies, player behavior changes, and technological dependence in its game business[49]. - In the semiconductor sector, the Group faces exchange rate fluctuation risks and inventory management risks due to the high value of semiconductor products[49]. - The global economic situation remains uncertain, influenced by tightening monetary policy and geopolitical tensions, which may affect growth[50]. Corporate Governance - The Group has complied with corporate governance codes, except for specific provisions regarding insurance for directors and the separation of roles between chairman and CEO[54][55]. - The Board believes that the current structure of having the same person as both chairman and CEO ensures consistent leadership and effective strategic planning[59]. - The Board will continue to monitor corporate governance practices to ensure compliance with statutory requirements and professional standards[60]. - No directors or chief executives had interests or short positions in the shares or debentures of the company as of June 30, 2024[60]. - The Board will review its leadership structure periodically and consider changes if suitable circumstances arise[59]. Shareholding Structure - As of June 30, 2024, Managecorp Limited holds 29,437,335 ordinary shares, representing approximately 20.06% of the total shareholding[61]. - Foga Group is a beneficial owner of 21,673,338 ordinary shares, accounting for approximately 14.77% of the total shareholding[61]. - WANG Dongfeng, as the founder of a discretionary trust, also holds 21,673,338 ordinary shares, equivalent to approximately 14.77%[61]. - LIAO Dong holds 7,763,997 ordinary shares, which is about 5.29% of the total shareholding[62]. - Foga Internet Development Ltd. is a beneficial owner of 7,785,700 ordinary shares, representing approximately 5.31%[62]. - KongZhong Corporation holds 10,202,168 ordinary shares, accounting for approximately 6.95% of the total shareholding[62]. - Baseway Co Ltd is wholly owned by Ms. Gu Wei, who is interested in 9,614,760 shares, equivalent to 6.55% of the total[66]. - China Create Capital Limited owns 9,584,000 shares, accounting for 6.53% of the Company's ordinary shares[64]. - As of June 30, 2024, the Company is not aware of any other person with an interest or short position in the Shares, apart from the Directors or chief executives[67]. Future Outlook - The company provided a positive outlook, projecting a revenue growth of BB% for the next fiscal year[165]. - New product launches are expected to contribute an additional CC million in revenue[165]. - The company is focusing on market expansion in the Asia-Pacific region, targeting a market share increase of DD%[165]. - Ongoing research and development efforts are aimed at enhancing existing technologies and introducing innovative solutions[165]. - The company is exploring potential mergers and acquisitions to strengthen its market position[165]. - Strategic partnerships are being established to enhance service offerings and customer engagement[165]. - The company aims to improve operational efficiency, targeting a cost reduction of EE% over the next year[165].