LINEKONG(HK:08267)2023-08-14 09:46Game Development and Publishing - The group has initiated testing for mobile game projects including "Naughty Heaven 1 Remake," "Naughty Heaven 2," and "Ys VIII," with a focus on enhancing user engagement and game quality[9]. - The historical registered users for "Naughty Heaven 1" exceed 20 million, capturing a significant share of the light competitive MOBA market[13]. - The group has launched "Wild Era" in Thailand on June 15, 2023, and maintains stable operations and product updates for "The Sailing Road" in South Korea, contributing to revenue[9]. - The mobile game "Ys: Dream of the Night" has entered the final optimization stage and is expected to launch in August 2023 after a global strategic cooperation with Bilibili[14]. - The MMORPG "Wild Era" was launched in Thailand on June 15, 2023, with plans for promotion in August, aiming to provide a new experience for players[14]. - The AVG+RPG female-oriented mobile game "Zhen Huan Chuan: Floating Life Dream" has completed version testing and is expected to launch by the end of 2023[14]. - The game "The Road to the Ocean" continues stable operations in South Korea, with two major updates planned for this year, including new professions and legendary ships[14]. - The group is enhancing its game publishing strategy and expanding market exploration in overseas regions[9]. - The group has applied advanced technologies such as ChatGPT and AIGC in the development and marketing of "Naughty Heaven 2," aiming to launch independent AI applications in the future[9]. Financial Performance - The company's revenue increased by approximately 120.5% from about RMB 44.7 million for the six months ended June 30, 2022, to about RMB 98.5 million for the six months ended June 30, 2023[25]. - Game business revenue contributed approximately RMB 47.0 million, a 26.3% increase or RMB 9.8 million compared to the same period in 2022, primarily due to the exclusive global release of "Ys: The Oath in Felghana" by Bilibili[27]. - The film and television business generated approximately RMB 51.5 million, a significant increase of 12,065% or RMB 51.1 million compared to about RMB 0.4 million in the same period last year, mainly due to revenue from "More Than You Like"[28]. - The company's total cost for the six months ended June 30, 2023, was approximately RMB 76.2 million, an increase of about 145.8% from approximately RMB 31.0 million in the same period in 2022[29]. - Gross profit for the six months ended June 30, 2023, was approximately RMB 22.3 million, a 63.2% increase from about RMB 13.7 million in the same period last year[30]. - The gross profit margin decreased to approximately 22.6% from about 30.6% in the same period last year, primarily due to the recognition of full costs related to the film "More Than You Like"[30]. - The company's operating loss for the six months ended June 30, 2023, was approximately RMB 12.2 million, an improvement from an operating loss of about RMB 24.5 million in the same period in 2022[34]. - The adjusted net loss for the six months ended June 30, 2023, was approximately RMB 8.0 million, a decrease of 62.4% compared to RMB 21.3 million for the same period in 2022[38]. - The company reported a net loss of RMB 12,868 thousand for the six months ended June 30, 2023, compared to a net loss of RMB 33,770 thousand for the same period in 2022, showing a reduction in losses of approximately 61.9%[104]. Investment and Asset Management - The group is actively exploring Web3 opportunities and has established LK Venture to enter the virtual asset investment market, optimizing asset allocation[11]. - In Q2 2023, the group purchased 33.1273 units of Bitcoin in the public market to achieve asset preservation and appreciation[11]. - The company has purchased 33.1273 units of Bitcoin as part of its asset allocation strategy, recognizing the long-term value of virtual assets[22]. - The establishment of LK Venture aims to enter the Web3 and virtual asset investment market, focusing on blockchain technology and innovative projects[22]. - The company plans to leverage insights into emerging Web3 technologies and virtual asset markets to achieve diversified asset allocation and value preservation[23]. - The group has launched a new Web3 game platform NAGA, featuring over 3,000 Web3 games and various user services, with further developments planned[19][20]. Strategic Focus and Future Plans - The group is committed to deepening its strategic investment in game and film sectors, aiming for long-term sustainable growth[9]. - The company plans to continue focusing on IP expansion, female-oriented and casual games, and Web3 initiatives in the second half of 2023[24]. - The group is collaborating with Tencent Video for a custom drama based on the S-level IP "Falling into Our Love," expected to start production in Q4 2023[10]. - The group is focusing on the production of high-quality IP dramas, with several projects in the pipeline, including "The Love of Our Lives" and "Ancient Music Wind and Flower Record" expected to start production soon[10]. - The company plans to pursue potential strategic acquisitions or investments in companies engaged in gaming and related businesses, with a focus on the film and television industry[53]. Shareholder and Equity Information - As of June 30, 2023, the company has a total of 367,974,964 issued shares[59]. - Mr. Wang Feng holds a 21.53% equity interest in the company through Wangfeng Management Limited, which directly owns 66,576,160 shares[57]. - Major shareholder Zhu Li holds 21.53% of the company's shares, amounting to 79,216,540 shares[65]. - Wangfeng Management Limited, a beneficial owner, holds 18.09% of the company's shares, totaling 66,576,160 shares[65]. - The company has a 9.47% ownership in shares held by Huiju Trust Co., Ltd., totaling 34,839,317 shares[68]. - IDG-Accel China Growth Fund L.P. holds 6.27% of the company's shares, amounting to 23,061,443 shares[68]. Employee Compensation and Stock Options - The company has adopted stock option and restricted share unit plans to incentivize directors and eligible personnel, reflecting a commitment to human resource development[48]. - The company has not declared an interim dividend for the six months ending June 30, 2023[55]. - The company has not issued any restricted share units or canceled any during the six months ending June 30, 2023[72]. - The company has a stock option plan approved on November 20, 2014, with various grants made at exercise prices ranging from HKD 0.65 to HKD 8.10[85]. - The company’s stock option plan is designed to incentivize employees and align their interests with shareholders[85]. - The total number of restricted share units granted to key personnel as of June 30, 2023, is 10,317,355[75]. Corporate Governance and Compliance - The audit committee has reviewed the unaudited interim financial results for the six months ending June 30, 2023, confirming the accounting principles adopted by the company[56]. - The board believes that the dual role of the chairman and CEO held by Mr. Wang since February 26, 2023, enhances strategic consistency despite a deviation from the code[97]. - The audit committee, established on April 24, 2014, is chaired by an independent non-executive director, ensuring compliance with GEM listing rules[98]. - The company has adhered to the corporate governance code as stipulated in the GEM listing rules during the reporting period[96]. Financial Risk and Asset Valuation - The group’s financial risk factors include market risk, credit risk, and concentration risk[119]. - The fair value estimation methods used for financial instruments are based on observable market data to minimize reliance on entity-specific estimates[123]. - The company utilized a discounted cash flow model for fair value estimation, with a discount rate range of 20% to 23%[131]. - The revenue compound annual growth rate (CAGR) used in the valuation was estimated at 6%[131]. - The fair value of the company's investments in joint ventures decreased from RMB 35,303,000 to RMB 22,245,000, representing a decline of 37%[128]. Discontinued Operations and Other Financial Information - The company sold its food business in December 2022, which is now classified as a discontinued operation[136]. - The company reported a total loss from discontinued operations of RMB 1,330,000 for the six months ended June 30, 2022, with no revenue generated from this segment[175]. - The company reported a net reversal of impairment losses on receivables of RMB 745,000 for the six months ended June 30, 2023, compared to a net loss of RMB 51,000 in the same period of 2022[169].