QINGCI GAMES(HK:06633)2022-04-22 08:38Financial Performance - Total revenue for the year ended December 31, 2021, was RMB 1,105,816, a decrease of 10% from RMB 1,226,920 in 2020[9] - Gross profit for the same period was RMB 812,599, down 14% from RMB 942,355 in 2020[9] - The company reported a loss attributable to equity holders of RMB 367,231, compared to a profit of RMB 103,739 in 2020, representing a 454% decline[9] - Adjusted net profit for the year was RMB 422,147, an increase of 154% from RMB 166,156 in 2020[9] - Game operation revenue decreased by 3.9% year-on-year to RMB 1,050.7 million for the year ended December 31, 2021[41] - Game licensing revenue fell by 38.9% year-on-year to RMB 35.8 million, primarily due to decreased licensing income from "Unexpected Maze" and "The Strong Snail" in Hong Kong, Macau, and Taiwan[41] - Information service revenue decreased by 74.5% year-on-year to RMB 19.3 million, mainly due to a reduction in ad views or clicks within games[42] - The revenue from self-developed games decreased by 26.9% to RMB 790.9 million, mainly due to reduced income from "The Strongest Snail"[44] - The fair value gain of investments measured at fair value through profit or loss increased from RMB 0.6 million in the year ended December 31, 2020, to RMB 5.0 million in the year ended December 31, 2021, representing a growth of 746.8%[53] - Other losses decreased by 65.4% from RMB 27.1 million in the year ended December 31, 2020, to RMB 9.4 million in the year ended December 31, 2021[56] - Income tax benefit increased significantly from an expense of RMB 9.6 million in the year ended December 31, 2020, to a benefit of RMB 32.6 million in the year ended December 31, 2021, a change of 440.7%[57] User Engagement - Average Monthly Active Users (MAU) decreased by 26.3% to 2,542,000 from 3,448,000 in 2020[10] - Average Monthly Paying Users (MPU) decreased by 11.2% to 440,000 from 495,000 in 2020[10] - The Average Revenue Per Paying User (ARPPU) increased by 8.4% to RMB 224 from RMB 206 in 2020[10] - Cumulative registered players reached 71,960,000, a growth of 20.8% from 59,585,000 in 2020[10] - The company has built a loyal community of 10.53 million active players, contributing to its growth and engagement[12] - The total registered users reached 72 million, representing a year-on-year growth of 20.8%, with an average monthly active user count of 2.5 million[19] Game Development and Releases - The company operates six mobile games and has a strong pipeline of 11 games[12] - The self-developed game "The Strongest Snail" generated cumulative revenue of over RMB 2 billion within 14 months of its launch, with strong ongoing performance[14] - The newly launched game "Lantern and Dungeon" achieved revenue exceeding RMB 180 million in its first month, receiving positive market feedback[14] - The game "The Strongest Snail" recorded cumulative revenue of approximately RMB 820 million for the year, with an average MAU exceeding 1.2 million and a weekly player retention rate of over 26.4%[22] - The game "Unusual Maze" generated total revenue of approximately RMB 50 million in 2021, with an average MAU of over 218,000[24] - The game "Lantern and Dungeon" had approximately 4.7 million registered users by the end of 2021, achieving revenue of RMB 250 million for the year[25] - The company is actively preparing for the release of "The Strongest Snail" in Japan, Europe, and Southeast Asia, indicating plans for market expansion[14] - The company continues to enhance its game development and operational strategies, focusing on building a robust overseas publishing team for future growth[14] Expenses and Cost Management - Research and development expenses decreased by 38% to RMB 91.2 million, primarily due to reduced bonuses from "The Strong Snail" revenue decline[50] - Sales and marketing expenses decreased by 45.6% to RMB 304.2 million, mainly due to reduced promotional spending as "The Strong Snail" reached maturity[49] - General and administrative expenses decreased by 16% to RMB 86.9 million, with a 12.4% decline after excluding one-time listing expenses[51] - Revenue cost increased by 3.0% year-on-year to RMB 293.2 million, with significant increases in third-party game developer commissions[43] Corporate Governance and Compliance - The board of directors includes both executive and independent non-executive members, ensuring governance and oversight[95] - The company has established committees for remuneration, audit, and nomination to enhance corporate governance[94] - The company has complied with all relevant laws and regulations in China regarding game publishing and operations, with no significant violations reported during the reporting period[92] - The independent auditor has reviewed the group's performance for the year ended December 31, 2021, confirming compliance with accounting policies and internal controls[180] Shareholder Information - The board proposed a final dividend of HKD 0.152 per share, totaling HKD 105 million, subject to shareholder approval[86] - The company has no existing equity-linked agreements as of the reporting period[116] - The board of directors and senior management hold significant shares, with Mr. Yang owning 29.81% and Mr. Huang owning 3.62% of the shares[121] - The company has no preferential purchase rights as per its articles of association or Cayman Islands law[109] Employee and Community Engagement - The company has 432 full-time employees as of December 31, 2021, with the majority located in China[75] - The company provides competitive compensation and benefits to attract and retain qualified personnel, including monthly social insurance contributions[104] - The company made charitable donations totaling RMB 2.59 million during the reporting period[114] - The company regularly provides training to employees to enhance their skills and keep them updated with industry developments[105] Future Plans and Investments - The company plans to allocate HKD 231.4 million for expanding its business in overseas markets, with the full amount unutilized until December 2024[176] - The company plans to strengthen its game publishing and operational capabilities in the Chinese mobile gaming market with an allocation of HKD 138.9 million, remaining unutilized until December 2024[178] - Strategic investments and acquisitions in upstream and downstream companies in the mobile gaming industry are planned with an allocation of HKD 138.9 million, remaining unutilized until December 2024[178] Risks and Challenges - The company faces various risks related to its gaming publishing business and the regulatory environment in China, which may impact operations[91] - There are significant risks associated with the contractual arrangements, including potential non-compliance with Chinese laws, which could lead to severe consequences for the company[168] - The company relies on its Chinese subsidiaries for dividend payments to meet cash and financing needs, which could be adversely affected by regulatory restrictions[170] - Tax reviews by Chinese authorities could result in additional tax liabilities, significantly reducing the company's net income and investment value[170]