CMGE (302.HK) New games launched one after another, revenue ushered in recovery May 24, 2023 137

PSR Recommendation: BUY Status: Maintained
Target Price: HKD3.00

CMGE (302.HK) is a global IP game ecological company. As of December 31, 2022,
the Group has a huge IP reserve, including 64 authorized Ips and 68 self-owned Ips,
totaling 132 IPs. According to data from Analysys, apart from Tencent Games, the
Group is the Chinese game publisher with the largest number of IP reserves, and
the Chinese game publisher with the largest number of mobile IP games launched
in the past two years. The Group’s revenue sources mainly come from three parts,
namely game distribution, game development and intellectual property (IP)
A review of 2022 Results
For the year ended 31 December 2022, the company’s revenue amounted to 2.71
billion (RMB, the same below), decreasing 31.4% YoY. The cost of sales amounted
to 1.6 billion, decreasing 35.5% YoY. Gross profit amounted to 1.11 billion,
decreasing 24.6% YoY. Gross profit margin was 41%, a slight increase of 3.7
percentage points YoY. The loss during the period amounted to 210 million,
turning from profit to loss YoY. The adjusted net loss amounted to 200 million,
turning from profit to loss YoY.
Revenue by Business Type
The revenue of the game publishing business amounted to 2.11 billion, decreasing
25% YoY, accounting for 77.9% of the total revenue. The decline in revenue was
mainly due to the postponement of obtaining licenses as scheduled for various
games planned to be published in the first half of 2022 by the Group such as
Sword and Fairy: Wen Qing, Rakshasa Street: Chosen One and Cultivation Fantasy
led to the delay in the launch of these games. However, Rakshasa Street: Chosen
One, an online mobile game published by the Group, was achieved a huge success
in Mainland China; the Group launched The New Legend of The Condor Heroes:
Iron Blood and Loyal Heart success. Publishing new games provided new
publishing revenue to the Group

About the author

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Elvis Kwok

香港恒生大學金融分析一級榮譽畢業,具有股票研究、技術分析和投資經驗。現為輝立証券持牌分析師,主要負責遊戲?娛樂?食品等板塊研究。 Elvis holds a BBA degree with first class honor major in Financial Analysis at the Hang Seng University of Hong Kong. He has experience in equity research, technical analysis and investment experience. He is currently a licensed research analyst at Phillip Securities and mainly covers Gaming, Entertainment and Food sectors.

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