家乡互动(03798) - 2023 - 中期业绩

Performance Summary Financial Highlights In H1 2023, revenue from continuing operations grew 22.0% to RMB 953 million, with adjusted net profit increasing 12.7% to RMB 446 million, demonstrating robust core business growth H1 2023 Key Financial Indicators (Continuing Operations) | Indicator | For the Six Months Ended June 30 (RMB '000) | YoY Change (%) | | :--- | :--- | :--- | | Revenue from Continuing Operations | 953,477 | 22.0% | | Gross Profit from Continuing Operations | 640,840 | 16.1% | | Profit Attributable to Owners (from Continuing Operations) | 395,293 | 49.6% | | Non-IFRS Adjusted Net Profit | 445,611 | 12.7% | | Basic Earnings Per Share (RMB) | 0.3098 | 1.4% | - The company sold and ceased its private game room card business in 2022, and related financial data has been excluded and restated from continuing operations to better reflect core business performance[2] Revenue by Virtual Product Type (RMB '000) | Revenue Source | H1 2023 | H1 2022 | YoY Change (%) | | :--- | :--- | :--- | :--- | | Self-developed Mobile Games | 818,662 | 639,418 | 28.0% | | Third-party Mobile Games | 94,635 | 82,623 | 14.5% | | Advertising Revenue | 40,180 | 59,722 | (32.7)% | | Total | 953,477 | 781,763 | 22.0% | Operational Highlights As of June 30, 2023, core operational metrics showed strong growth, with DAUs increasing 41.5% to 14.25 million and MAUs up 21.9% to 67.95 million, indicating significant user base and activity enhancement Core Operational Data | Indicator | As of June 30, 2023 | As of June 30, 2022 | YoY Change | | :--- | :--- | :--- | :--- | | Daily Active Users (DAUs) | 14,247,326 | 10,068,889 | +41.5% | | Average Monthly Active Users (MAUs) | 67,949,141 | 55,757,653 | +21.9% | | Paying Users | 9,230,631 | 8,975,481 | +2.8% | Business Overview and Outlook Business Review The company, a developer and operator of localized mahjong, poker, and casual games, stabilized its player base and boosted paying intent through new gameplay and payment models, while optimizing marketing strategies to reduce selling and marketing expenses by 40.1%, and enhancing brand influence with Weile Mahjong becoming the sole official online mahjong grading platform - The company is positioned as a leading local chess and card game operator in China, committed to growing into a global casual competitive game platform[5] - By introducing new gameplay and new payment models such as top-up monthly cards, the company stabilized its player base while increasing user willingness to pay[5] - Marketing strategy shifted from large-scale campaigns to precise marketing, with 16 event accounts deployed on platforms like Douyin, enhancing brand exposure and user acquisition, leading to a significant decrease in marketing expenses[6] - Weile Mahjong was designated as the sole online mahjong athlete grading cooperation platform, with over 2.5 million players registered as mahjong athletes by the end of the reporting period[6] - Launched the tower defense casual game 'Meet Meowkes' in May 2023, and plans to launch products like 'Weile 3D Dou Dizhu' to upgrade the gaming experience[6] Business Outlook In H2 2023, the company plans to consolidate its competitive advantage through five strategies: enriching game portfolio with localized innovations, increasing new media marketing to lower acquisition costs, expanding coverage to over 30 prefecture-level cities in China, boosting R&D for hardcore and competitive games and overseas markets, and seeking external cooperation through incubation, investment, and M&A - Plans to expand its game portfolio, launching localized chess and card game variants to attract users in prefecture-level cities[7] - Aims to increase market share in over 30 prefecture-level cities across multiple provinces including Zhejiang, Fujian, Anhui, and Jiangsu[7] - Will continue to invest R&D resources to launch new game types such as hardcore and competitive games, and expand into overseas markets to generate international revenue[8] - Will explore cooperation opportunities with promising R&D teams through various forms including incubation, investment, and acquisitions[9] Management Discussion and Analysis Financial Review — Continuing Operations During the reporting period, the company demonstrated robust financial performance with revenue growing 22.0% driven by game innovation and new media partnerships, while cost of sales increased 36.1% leading to a gross margin decline from 70.6% to 67.2%, selling and marketing expenses significantly decreased by 40.1%, administrative expenses rose 61.7% due to R&D and staff costs, and profit before tax ultimately increased by 54.2% Revenue H1 2023 revenue increased 22.0% to RMB 953.5 million, primarily driven by continuous innovation in mahjong and poker games and deep collaboration with new media channels, which effectively boosted DAU and player stickiness, with virtual token sales increasing their revenue contribution from 81.8% to 85.9% - Revenue increased by 22.0% year-on-year to RMB 953.5 million, primarily benefiting from game innovation and cooperation with new media channels[10] Revenue Structure Proportion Change | Revenue Source | H1 2023 Proportion | H1 2022 Proportion | | :--- | :--- | :--- | | Sales of Virtual Tokens | 85.9% | 81.8% | | Distribution of Third-party Mobile Games | 9.9% | 10.6% | | Advertising | 4.2% | 7.6% | Cost of Sales Cost of sales increased 36.1% year-on-year to RMB 312.6 million, primarily due to a RMB 79.1 million increase in commissions and fees paid to third-party distribution channels and payment providers, in line with revenue growth - Cost of sales increased by 36.1% year-on-year, primarily driven by an increase of RMB 79.1 million in commissions and fees paid to third-party distribution channels and payment providers[11] Gross Profit and Gross Margin Gross profit increased 16.1% year-on-year to RMB 640.8 million, but gross margin decreased from 70.6% to 67.2% due to a higher growth rate in cost of sales compared to revenue - Gross profit increased by 16.1% year-on-year, but gross margin decreased from 70.6% to 67.2%[12] Other Income, Gains and Losses Other income increased 40.6% year-on-year to RMB 30.4 million, primarily from higher interest income, while other gains and losses recorded a gain of RMB 27.0 million, compared to a loss of RMB 1.6 million in the prior period, mainly due to a RMB 30.6 million gain from the disposal of investments in associates - Other income increased by 40.6% year-on-year, primarily due to a RMB 6.6 million increase in interest income[13] - Other gains and losses recorded a net gain of RMB 27.0 million, primarily from a RMB 30.6 million gain on disposal of investments in associates[14] Selling and Marketing Expenses Selling and marketing expenses significantly decreased by 40.1% year-on-year to RMB 129.7 million, primarily because player top-up performance exceeded expectations in H1, leading the company to reduce marketing and advertising spending by RMB 90.7 million - Selling and marketing expenses significantly decreased by 40.1% year-on-year, mainly due to a RMB 90.7 million reduction in advertising and marketing expenses[16] Administrative and Other Expenses Administrative and other expenses increased 61.7% year-on-year to RMB 146.4 million, primarily due to a RMB 11.6 million increase in staff costs, a RMB 10.9 million increase in share-based payments, and a RMB 27.1 million increase in subcontracted technical fees related to new game R&D - Administrative and other expenses increased by 61.7% year-on-year, primarily due to increased staff costs, share-based payments, and R&D subcontracting fees[17] Profit Before Income Tax Profit before tax increased 54.2% year-on-year to RMB 449.5 million, with the pre-tax profit margin rising from 37.3% to 47.1%, driven by higher other gains and significantly reduced selling expenses, while income tax expense increased 69.7% due to higher withholding tax provisions, raising the effective tax rate from 9.5% to 10.4% - Profit before tax increased by 54.2% year-on-year to RMB 449.5 million, with the pre-tax profit margin improving from 37.3% to 47.1%[18] - Income tax expense increased by 69.7% year-on-year, with the effective tax rate rising from 9.5% to 10.4%, primarily due to provisions for withholding tax on undistributed profits[19] Profit Attributable to Owners of the Company During the reporting period, profit attributable to owners of the company (including continuing and discontinued operations) was RMB 395.3 million, an increase of 3.9% from RMB 380.3 million in the prior year - Profit attributable to owners of the company increased by 3.9% year-on-year to RMB 395.3 million[20] Non-IFRS Measures — Adjusted Net Profit To better assess core business performance, the company disclosed adjusted net profit, which, after excluding share-based payment expenses (RMB 27.8 million) and withholding tax on undistributed profits (RMB 22.5 million), amounted to RMB 445.6 million in H1 2023, representing a 12.7% year-on-year increase Adjusted Net Profit Reconciliation (RMB '000) | Item | H1 2023 | H1 2022 | | :--- | :--- | :--- | | Profit Attributable to Owners of the Company for the Period | 395,293 | 380,299 | | Add: Share-based Payment Expenses | 27,818 | 15,180 | | Add: Withholding Tax on Undistributed Profits | 22,500 | — | | Adjusted Net Profit Attributable to Owners of the Company | 445,611 | 395,479 | Liquidity and Capital Resources The Group primarily funds its operations with cash generated from operating activities and adopts a prudent financial management approach, holding approximately RMB 1.156 billion in cash and cash equivalents, predominantly in RMB, with no bank borrowings and a zero gearing ratio, indicating a healthy financial position Cash and Cash Equivalents As of June 30, 2023, the Group held approximately RMB 1.156 billion in cash and cash equivalents, a slight decrease from RMB 1.163 billion at the end of 2022, with approximately RMB 1.028 billion denominated in RMB, and no foreign currency risk hedging currently in place - As of June 30, 2023, cash and cash equivalents amounted to approximately RMB 1.156 billion, with about 89% (RMB 1.028 billion) denominated in RMB[24] Debt As of June 30, 2023, the Group had no short-term or long-term bank borrowings or other debts, apart from RMB 9.3 million in lease liabilities, maintaining a zero gearing ratio and no pledged assets - The Group has no bank borrowings and a zero gearing ratio[25][26] Capital Expenditure During the reporting period, capital expenditure significantly increased to approximately RMB 71.2 million from RMB 17.6 million in the prior period, primarily for the purchase of office furniture and equipment - Capital expenditure significantly increased year-on-year from RMB 17.6 million to RMB 71.2 million, primarily for the purchase of office furniture and equipment[26] Significant Acquisitions, Disposals and Future Plans for Major Investments During the reporting period, the Group undertook a significant asset disposal, agreeing in May 2023 to sell its 40% equity interests in associates Jilin Xinyue and Jilin Anrui for a total consideration of RMB 135 million, with no other major acquisitions or disposals during the period - In May 2023, the Group agreed to dispose of its 40% equity interest in Jilin Xinyue (for RMB 99.9 million) and 40% equity interest in Jilin Anrui (for RMB 35.1 million) to third parties[27] Employees and Staff Costs As of June 30, 2023, the Group had 601 full-time employees, with over half (324) engaged in game development, and total staff costs for H1 amounted to approximately RMB 101.2 million, a 16.6% year-on-year increase, primarily due to higher salaries, benefits, and share-based compensation - As of the end of the reporting period, the Group had 601 full-time employees, with game developers constituting the largest proportion (324 employees)[29] - Total staff costs for H1 amounted to RMB 101.2 million, a 16.6% year-on-year increase, primarily due to increased salaries and share-based incentives[29] Condensed Consolidated Financial Statements Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income The financial report shows H1 2023 revenue from continuing operations at RMB 953 million and gross profit at RMB 641 million, with profit for the period from continuing operations at RMB 403 million after accounting for other gains and controlled selling expenses, resulting in a total profit for the period of RMB 403 million, compared to RMB 380 million in the prior year, including discontinued operations Consolidated Statement of Profit or Loss Summary (RMB '000) | Item | H1 2023 | H1 2022 | | :--- | :--- | :--- | | Revenue (Continuing Operations) | 953,477 | 781,763 | | Gross Profit (Continuing Operations) | 640,840 | 552,090 | | Profit Before Income Tax (Continuing Operations) | 449,484 | 291,581 | | Profit for the Period from Continuing Operations | 402,557 | 263,923 | | Profit for the Period from Discontinued Operations | — | 116,032 | | Total Profit for the Period | 402,557 | 379,955 | | Profit Attributable to Owners of the Company for the Period | 395,293 | 380,299 | Condensed Consolidated Statement of Financial Position As of June 30, 2023, the company's total assets were RMB 2.237 billion, total liabilities RMB 187 million, and net assets reached RMB 2.051 billion, a 14.3% increase from RMB 1.794 billion at the end of 2022, with net current assets of RMB 1.601 billion, indicating strong liquidity and solvency Consolidated Statement of Financial Position Summary (RMB '000) | Item | As of June 30, 2023 | As of December 31, 2022 | | :--- | :--- | :--- | | Non-current Assets | 475,054 | 495,509 | | Current Assets | 1,762,104 | 1,609,796 | | Total Assets | 2,237,158 | 2,105,305 | | Current Liabilities | 161,181 | 274,678 | | Non-current Liabilities | 25,402 | 36,614 | | Total Liabilities | 186,583 | 311,292 | | Net Assets | 2,050,575 | 1,794,013 | | Equity Attributable to Owners of the Company | 2,043,717 | 1,794,419 | Condensed Consolidated Statement of Changes in Equity As of June 30, 2023, equity attributable to owners of the company increased from RMB 1.794 billion at the beginning of the year to RMB 2.044 billion, primarily driven by profit for the period of RMB 395 million, partially offset by dividends paid of RMB 163 million and share repurchases of RMB 7.66 million - Equity attributable to owners of the company increased from RMB 1.794 billion at the beginning of the year to RMB 2.044 billion[40] - The primary contribution to the increase in equity was profit for the period of RMB 395 million, with the main reduction being dividends paid of RMB 163 million[40] Condensed Consolidated Cash Flow Statement In H1 2023, net cash inflow from operating activities significantly increased to RMB 183 million, while net cash outflow from investing activities was RMB 21.58 million, mainly for financial assets and property equipment, and net cash outflow from financing activities was RMB 176 million, primarily for dividend payments and share repurchases, with cash and cash equivalents at period-end totaling RMB 1.156 billion Consolidated Cash Flow Statement Summary (RMB '000) | Item | H1 2023 | H1 2022 | | :--- | :--- | :--- | | Net Cash Generated from Operating Activities | 182,951 | 79,652 | | Net Cash (Used in)/Generated from Investing Activities | (21,580) | 6,858 | | Net Cash Used in Financing Activities | (176,128) | (20,068) | | Net (Decrease)/Increase in Cash and Cash Equivalents | (14,757) | 66,442 | | Cash and Cash Equivalents at End of Period | 1,155,952 | 1,193,791 | Notes to the Condensed Consolidated Financial Information 1. General Information The Group primarily engages in mobile game development, publishing, and operation in China, with financial statements prepared under International Accounting Standards, and a significant event during the reporting period was the disposal of 40% equity interests in associates Jilin Xinyue and Jilin Anrui - Significant event during the reporting period: Disposal of 40% equity interest in Jilin Xinyue (for RMB 99 million) and 40% equity interest in Jilin Anrui (for RMB 35.1 million) to third parties[47] 3. Revenue and Segment Information The Group's revenue primarily derives from sales of virtual tokens for self-developed mobile games, distribution of third-party mobile games, and advertising, with all operating activities managed and reported as a single segment (mobile game development and operation in China), and all revenue generated within China - All of the Group's revenue is generated from China and managed and reported as a single operating segment[50][52] 7. Disposal of Subsidiaries / Discontinued Operations To streamline operations, the Group disposed of its 100% equity interest in Jilin Yuker, which engaged in the private game room card business, and ceased related operations in H1 2022; this business generated RMB 116 million in profit (including disposal gain) in H1 2022 and is now classified as discontinued operations, with no such business in H1 2023 - The Group disposed of and ceased its private game room card business in H1 2022, with Jilin Yuker being the entity for this business[59] - Discontinued operations contributed RMB 116 million in profit in H1 2022, which included a gain of RMB 97.8 million from the disposal of Jilin Yuker[60] 8. Dividends During the reporting period, the company paid a final dividend of HKD 0.14 per share for 2022, totaling approximately RMB 163 million, with basic earnings per share from continuing operations at RMB 0.3098 and diluted earnings per share at RMB 0.3073 - Paid a final dividend of HKD 0.14 per share for 2022, totaling RMB 163 million[66] Earnings Per Share (RMB) | Item | H1 2023 | H1 2022 | | :--- | :--- | :--- | | From Continuing Operations - Basic | 0.3098 | 0.2123 | | From Continuing Operations - Diluted | 0.3073 | 0.2097 | | From Continuing and Discontinued Operations - Basic | 0.3098 | 0.3056 | 10. Investments in Associates During the reporting period, the Group disposed of its entire equity interests in Jilin Xinyue and Jilin Anrui, recognizing a gain of RMB 27.88 million, while also making new investments in Shenzhen Jinyunshan and Xiamen Chuyao; as of period-end, trade receivables stood at RMB 196 million with a healthy aging profile, and prepayments and other receivables significantly increased due to higher advertising prepayments - Disposed of entire equity interests in Jilin Xinyue and Jilin Anrui for a total fair value consideration of RMB 116 million, recognizing a gain of RMB 27.88 million[77][78] - Made new investments in Shenzhen Jinyunshan (49% equity interest) and Xiamen Chuyao (40% equity interest) for a total consideration of RMB 10 million[79] - Trade receivables amounted to RMB 196 million, with credit terms typically 0 to 60 days, and overdue but not impaired amounts over 90 days totaling RMB 3.14 million[80][81] Other Information Interim Dividend The Board does not recommend paying any interim dividend for H1 2023, and during the reporting period, the company repurchased 4,798,000 shares on the open market through a trustee for a total consideration of approximately RMB 7.66 million for its share award scheme - The Board does not recommend declaring an interim dividend for 2023[87] - During the period, 4,798,000 shares were repurchased for the share award scheme, at a total consideration of RMB 7.66 million[87] Compliance with Corporate Governance Code During the reporting period, the company largely complied with the Corporate Governance Code, with one deviation where the roles of Chairman and CEO are held by the same individual, Mr. Wu Chengze; the Board believes this arrangement benefits Group management and maintains appropriate independence, and the Audit Committee has reviewed the interim results - The company has one corporate governance deviation: the roles of Chairman and Chief Executive Officer are combined and held by Mr. Wu Chengze[88][89] - The Audit Committee, comprising three independent non-executive directors, has reviewed these interim results[91] Changes in Directors' Biographical Details under Rule 13.51B(1) of the Listing Rules During and after the reporting period, the company's Board of Directors underwent several changes, including Mr. Guo Shunshun's resignation as executive director, the election of Mr. Ding Chunlong and Mr. Tang Yinghao as executive directors, and the retirement of Mr. Jiang Mingkuan and Mr. Su Bo as executive directors Director Change Details | Name | Change Details | | :--- | :--- | | Mr. Guo Shunshun | Resigned as Executive Director on June 1, 2023 | | Mr. Ding Chunlong | Elected as Executive Director on March 30, 2023 | | Mr. Tang Yinghao | Elected as Executive Director on March 30, 2023 | | Mr. Jiang Mingkuan | Retired as Executive Director on May 22, 2023 | | Mr. Su Bo | Retired as Executive Director on May 22, 2023 |