QINGCI GAMES(HK:06633)2023-09-21 09:01Financial Performance - Revenue for the six months ended June 30, 2023, was RMB 333.94 million, representing a 25% increase from RMB 268.11 million in the same period of 2022[10]. - Gross profit for the same period was RMB 225.41 million, a 36% increase from RMB 166.01 million year-on-year[10]. - The net profit attributable to equity holders was RMB 41.48 million, compared to a loss of RMB 75.67 million in the previous year, marking a significant turnaround[10]. - Total revenue for the six months ended June 30, 2023, was RMB 333.9 million, a 24.6% increase from RMB 268.1 million in the same period of 2022[25]. - Operating profit improved to RMB 51,848 thousand, compared to an operating loss of RMB 62,538 thousand in the prior year[73]. - Net profit for the period was RMB 41,717 thousand, a significant recovery from a net loss of RMB 86,872 thousand in the previous year[74]. - Basic and diluted earnings per share for the period were RMB 0.06, compared to a loss per share of RMB 0.11 in the same period last year[74]. - Total comprehensive income for the period was RMB 84,801 thousand, compared to a loss of RMB 30,072 thousand in the prior year[74]. User Engagement and Game Performance - Average Monthly Active Users (MAU) decreased to 1.80 million, down 23% from 2.35 million in the prior year[11]. - Average Revenue Per Paying User (ARPPU) increased by 41% to RMB 296 from RMB 209 year-on-year[11]. - Cumulative registered players reached 82.37 million, an 8% increase from 76.16 million in the previous year[11]. - The average weekly player retention rate for "Strong Snail" reached 25.9%, indicating strong player engagement[15]. - The game "Super Snail" generated approximately RMB 210 million in revenue during the reporting period, achieving top rankings in various regions including Thailand and the US[16]. - "New Legend of Sword and Fairy" launched on June 9, 2023, and recorded revenue of approximately RMB 68.3 million, reaching the top position in the iOS free games chart and 14th in the sales chart[17]. - "The Lantern and the Dungeon" has accumulated revenue of approximately RMB 303 million since its launch, with a total of 5.07 million registered players and an average weekly retention rate of 31.72%[17]. - The game "Summoner's Plan" launched in January 2023, generating approximately RMB 27.8 million in revenue by June 30, 2023[17]. Game Development and Launches - The company launched several new games, including "Magic Plan" in January 2023 and "New Legend of the Swordsman" in June 2023, achieving top rankings in various app stores[14]. - The game "Strong Snail" was launched in multiple international markets, including the US, Canada, and Australia, topping the free game charts in these regions[14]. - The company is preparing to release new self-developed games and licensed titles in the second half of 2023, enhancing its game portfolio[14]. - The company has a pipeline of 12 mobile games across various genres, with expected launch dates ranging from 2023 to 2025[21]. Revenue Sources and Costs - The company's game operation revenue increased by 28.2% to RMB 318.4 million for the six months ended June 30, 2023, compared to RMB 248.3 million in the same period of 2022[26]. - Revenue from self-developed games rose by 5.6% to RMB 237.9 million, driven by new game launches in Thailand and ongoing operations in Japan[26]. - Revenue from licensed games surged by 248.7% to RMB 80.4 million, primarily due to the new game "New Sword and Fairy" contributing to revenue growth[26]. - Game licensing revenue decreased by 24.5% to RMB 11.3 million, attributed to reduced licensing income from certain games in mainland China and Hong Kong, Macau, and Taiwan[27]. - Information service revenue fell by 47.8% to RMB 2.5 million, mainly due to a decrease in ad views or clicks within games[28]. - The cost of revenue increased by 6.3% to RMB 108.5 million, with distribution and payment channel commissions accounting for 65.0% of total costs[31]. Expenses and Financial Management - Employee benefit expenses decreased by 22.5% to RMB 6.6 million, reflecting a reduction in related employee costs[32]. - Sales and marketing expenses decreased by 18.9% from RMB 151.7 million to RMB 123.1 million, primarily due to reduced marketing expenses for "The Strongest Snail" in Japan[34]. - Research and development expenses decreased by 19.7% from RMB 55.6 million to RMB 44.7 million, mainly due to reduced employee costs and outsourced technical service fees[35]. - General and administrative expenses decreased by 48.4% from RMB 41.1 million to RMB 21.2 million, attributed to lower employee costs and reduced professional service fees[36]. - Fair value gains on investments decreased by 41.2% from RMB 11.2 million to RMB 6.6 million, primarily due to decreased fair value gains from investment funds and poor performance of certain long-term investments[37]. - Other income increased by 103.5% from RMB 4.5 million to RMB 9.2 million, mainly due to an increase in government subsidies[38]. Financial Position and Assets - Total cash and cash equivalents decreased by 30.9% from RMB 1,001.9 million to RMB 692.4 million, mainly due to the use of funds raised from a global offering and short-term investments[42]. - Current assets amounted to approximately RMB 1,738.5 million, with current liabilities of approximately RMB 153.9 million, resulting in a current ratio of 1,129.7% as of June 30, 2023[42]. - The debt-to-asset ratio improved from 17.5% to 9.2% as of June 30, 2023, indicating a stronger financial position[42]. - As of June 30, 2023, the company's short-term investments increased by 82.9% to approximately RMB 895.7 million from RMB 489.7 million as of December 31, 2022[43]. - The total capital expenditure for the six months ended June 30, 2023, was approximately RMB 1.1 million, a decrease from RMB 7.7 million for the same period in 2022[45]. - The company had no significant acquisitions or disposals of subsidiaries, associates, or joint ventures during the reporting period[44]. Shareholder Information and Corporate Governance - Major shareholders include Mr. Yang, who holds 29.81% of the shares, and Mr. Huang, who holds 3.62% and 5.40% through controlled entities[49]. - The board of directors has resolved not to recommend an interim dividend for the six months ended June 30, 2023[48]. - The company has complied with all corporate governance code provisions during the reporting period[65]. - All directors confirmed compliance with the standard code for securities trading during the six months ending June 30, 2023[66]. Future Plans and Investments - The company plans to deepen its market presence in Southeast Asia and is preparing to launch an H5 version of "Super Snail" in Q4 2023[22]. - The company plans to enhance its game publishing and operational capabilities in the mobile gaming market, with an investment of HKD 138.9 million expected by December 2024[63]. - Strategic investments and acquisitions in the mobile gaming industry are projected to require HKD 138.9 million, also expected by December 2024[63]. - The company plans to reinvest accumulated undistributed profits of RMB 304 million to further expand its business in China[123].