XD Inc (2400 HK) Steady Game Revenue Growth, TapTap MAUs Growth Beats September 28, 2020 74

PSR Recommendation: ACCUMULATE Status: Upgraded
Target Price: HKDHKD43.25

Investment Summary

1H20 interim result overview The 1H20 Revenue of XD Inc. was RMB 1.44 billion (+10.0% yoy). The revenue contributed by game operating business was RMB 1.19 billion (+8.1% yoy). Within the game operating business, the revenue of online game operating business was RMB 1.11 billion (+3.8% yoy). The rise was mainly attributed to the solid performance of Sausage Man (香腸派對) in 1H20. But the solid performance of Sausage Man (香腸派對) was partly offset by decreases of revenue from games under maturity stage, such as Ragnarok M (仙境傳說). In addition, the revenue contributed by premium game operation was RMB 50.5 million (+98.4% yoy), mainly attributed by the solid performance of new game Juicy Realm (惡果之地) and old game Muse Dash (喵斯快跑). On the other hand, the company’s revenue from information services in 1H20 was RMB 252 million (+19.9% yoy), and contributed 17.6% of the company’s total revenue. The yoy increase was mainly attributed by the huge increase in MAUs of TapTap platform in 1H20. As affected by the quarantine, the MAUs of TapTap platform in 1H20 was 24.8 million (+51.9% yoy).

The company’s GP in 1H20 was RMB 826 million (-5.9% yoy), with GPM at 57.3% (-9.7ppt yoy). The GPM of game business in 1H20 was 51.3% (-11.3ppt yoy). The decrease was mainly attributed by the fact that the contribution from game operating revenue recognized on a gross basis to total game operating revenue has increased from 49.2% to 73.1%. On the other hand, The GPM of information services in 1H20 was 85.5% (-4.2ppt yoy). The decrease was mainly attributed by the fact the increase in cost as a result of TapTap MAUs increase was higher than the corresponding revenue increase. The Adjusted NP attributed to parent in 1H20 was RMB 207 million (-12.7% yoy)

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