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Public company info - 7Road Holdings Limited , 00797.HK

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7Road Holdings Limited, 00797.HK - Company Profile
Chairman Meng Shuqi
Share Issued (share) 2,753,000,000
Par Currency U.S. Dollar
Par Value 5.0E-6
Industry E-Commerce & Internet Services
Corporate Profile Business Summary: The Company is in the development and distribution of web games and mobile games in the People’s Republic of China (the “PRC”) and other countries and regions (the “Business”). Performance for the year: For the year ended 31 December 2020, the total revenue amounted to approximately RMB424.3 million, representing an increase of approximately 27.3% as compared with the year ended 31 December 2019. For the year ended 31 December 2020, the Company recorded a profit attributable to owners of the Company amounted to approximately RMB81.3 million, representing an increase of approximately 653.5% as compared with the year ended 31 December 2019. Business Review OVERVIEW The Group is a leading game developer and operator in China with a global reach. Since the group’s incorporation in 2008, the group have been engaging in the R&D, operation and licensing of a number of popular games. A sizable portion of revenue is derived from the overseas markets and the group’s games have been published in more than 100 countries and regions. The group is also committed to bringing the high quality of gameplay experience in various game formats to the group’s users. In recent years, the group have been strategically expanding the group’s business focuses to develop and operate mobile games, which enjoy wide popularity among game players. According to the “2020 Global Games Market Report” released by Newzoo in 2020, the global online game market in 2020 was expected to record a revenue of US$159.3 billion. The mobile-end game market remained the largest segmented market with an expected market revenue of US$77.2 billion, representing an increase of 45.0% year-on-year, while income from web games would decrease by 13.4% year-on-year. Approximately 40.0% of the revenue in global game market arose from smartphone games. In 2020, revenue from the Asia Pacific online game market was expected to increase by 9.9% as compared with 2019, reaching US$78.42 billion and accounting for 49.0% of the global online game market. The North American market remained the second largest online game market, and the revenue from this region in 2020 was expected to be approximately US$40.0 billion, which accounted for 25.0% of the global online game market. The European online game market was expected to generate US$29.6 billion in revenue, which accounted for 19.0% of the global online game market. The European market had the slowest growth rate with only 7.8% year-on-year. The Latin American, Middle East and African markets were expected to slightly get ahead of the North American market in terms of game revenue growth, and the game revenue from these regions was expected to be over US$11.4 billion in total in 2020, which accounted for 7% of the global online game market. According to “2020 China Gaming Industry Report” jointly released by the China Game Publishers Association Publications Committee (GPC) of the China Audio-video and Digital Publishing Association (中國音數協遊戲工委) and the International Data Corporation (IDC), in 2020, the revenue generated from China’s online game market increased by RMB47.81 billion to approximately RMB278.7 billion as compared to 2019, maintaining a rapid growth by a year-on-year increase of 20.7%. As at 31 December 2020, the number of game players in China exceeded 665 million, with a year-on-year increase of 3.7%. In 2020, the Company recorded a total revenue of approximately RMB424.3 million, representing an increase of approximately 27.3% as compared to 2019. In 2020, the gross profit and gross profit margin of the Company was RMB313.5 million and 73.9%, respectively. In 2020, the Company recorded profit attributable to Shareholders amounted to approximately RMB81.3 million, which was mainly due to the profit contribution of Xinla Group, after the Group completed its acquisition in October 2019. Prospects: In 2021, the Group will continue to adhere to the concept of high-quality games and strive to create high-quality game products. The Group will make full use of the value of its existing intellectual property (“IP”) and its experience accumulated over the years in game development to form a stable IP product line which consists of original innovations, Japanese comics and cartoon adaptations and domestic licensing to enrich the Group’s product portfolio. The Group will also take into full account player experience and optimize functions and game rules in newly developed games. The Group will actively explore diversified income streams in order to increase the revenue and drive the performance of the Group, while leveraging in-game virtual commodity consumption as its basic profit model. In 2021, the group will continue to strategically expand in overseas markets while focusing on the domestic market. The group will be committed to updating and promoting the group’s existing games and conducting R&D of new games to consolidate the domestic market and optimize the group’s globalization strategy. The group will continue to prepare for the development of the Group’s core IP, including the “DDTank Classics” (彈彈堂復古版), which is expected to be tested and launched online during the second half of this year. In addition, the group also cooperated with females in the PRC and game developers to develop a new product called “Flowers and Dream” (花開易夢閣), which is initially planned to be launched in the Greater China Region in the fourth quarter of 2021 or in early 2022. In terms of the group’s strategies of the 2D Japanese anime IP, the group participated in the development of a well-known first-tier anime IP mobile game, which is expected to be tested for the first time in 2022. As the first self-developed mobile game of this well-known first-tier anime IP in the PRC, the group strive to provide a mobile game with original taste to a large number of fans of this well-known first-tier anime IP in the PRC by reimagining the humour and silliness of the original plots. In addition, the group will also publish an anime adaptation mobile game “Mini Super Cook” (廚神小當家), themed around gourmet, whose IP’s influence is widely recognized in the anime industry and is well-received. The simulation game is expected to be launched in 2022. The group will also try to participate in more different segmented areas, including attempts and preparations for products such as casual competitive and female-oriented games, with an aim to capture more market opportunities. Also, the Group will continue the joint R&D and publication of its IP through licensing IP or cooperation with other outstanding developers on quality games. In addition, the group will consider to invest in and acquire high-quality companies in the industry and strengthen the group’s synergic strategy. According to the Group’s development strategy, the Group will selectively acquire or invest in potential IP or high-quality R&D and publishing companies in the industry chain from third parties such as popular literature, comics and social networks, and will also seek close cooperation with outstanding game developers or publishers to strengthen the Group’s business. As disclosed in the announcement of the Company dated 26 April 2021, the Group completed the acquisition of 100% equity interest in Beijing Meimai, which has established a cooperative relationship with the Roblox Platform in China. Roblox is the world’s top sandbox game development company, and Beijing Meimai is primarily responsible for the content review, developer community maintenance and new media operations business of the Roblox Platform in China. The Group will continue to improve its gaming portfolio and further enhance its gaming development capabilities and performance, so as to bring the Group to an all-new level of development. At the same time, the Group will strive to integrate, coordinate and optimize existing business resources with other resources such as the R&D capabilities, game products, marketing channels, operation and management, and existing game players of businesses acquired or to be acquired. IP licensing will remain an important part of the group’s long-term strategy. In 2021, the group will continue to focus on IP R&D through IP licensing or cooperation with other quality vendors. The group will continue to recruit more talents and retain existing talents with attractive remuneration policies to strengthen the group’s IP R&D capabilities. At the same time, the group will actively seek appropriate investment and cooperation opportunities. Leveraging on the group’s current principal gaming business, the group shall proactively explore and expand the group’s business into other areas with potential such as cloud computing, clouding storage and other gaming-related areas. This will further enhance the group’s sustainability and profitability in the long run in response to the possible impact of the increasingly competitive industry environment and the ever-changing industry policies on the business operation of the Group, creating values for the Group and the Shareholders. As disclosed in a Company’s announcement dated 9 May 2021, the Board resolved on 1 April 2021 that the Group will commence the provision of cloud computing services as a new business activity of the Group, in order to expand its income streams and create better returns for Shareholders as well as diversify its income streams. The services will be provided in areas including anime, artificial intelligence, big data supercomputing and blockchain technology-related services. In addition, the global cloud storage market size is expected to grow from US$50.1 billion in 2020 to US$137.3 billion by 2025, according to MarketsandMarkets, a research institution, and the CAGR is expected to be 22.3% during the forecast period. In this regard, based on the feasibility analysis and a resolution of the Board, the Group also started to introduce relevant partners to purchase relevant cloud storage equipment and proposed to enter into the provision of cloud storage services as another new business activity. With the current rapid information technology development in China and the significant demand for information data, the demand for cloud computing, clouding storage and other cloud-related services will experience continuous and rapid growth in the foreseeable future. Therefore, the Board believes that this will be a good opportunity for the Group to commence the provision of cloud computing services and clouding storage services, respectively. The Group will continue to seek investment and development opportunities in the cloud computing, clouding storage and cloud-related market. The group is fully looking forward to 2021 and will expect to continue to expand the group’s business in the overseas markets and further improve the group’s global layout in the gaming industry and proactively explore development opportunities in cloud computing, cloud storage and cloud-related services markets. The group will further enhance the group’s comprehensive competitiveness, resource control ability, subsequent development ability and risk resistance ability, so as to consolidate, develop and enhance the group’s position in the industry and create more value for Shareholders.

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