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Public company info - Homeland Interactive Technology Ltd. , 03798.HK
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Homeland Interactive Technology Ltd., 03798.HK - Company Profile
Chairman Wu Chengze
Share Issued (share) 1,256,000,000
Par Currency U.S. Dollar
Par Value 5.0E-6
Industry E-Commerce & Internet Services
Corporate Profile Business Summary: The Group is primarily engaged in the development, publication and operation of mobile games in the PRC. Performance for the year: The Group’s revenue for the year ended 31 December 2019 amounted to approximately RMB565.0 million, representing an increase of 28.5% from approximately RMB439.5 million recorded in 2018. the Group’s gross profit increased by 31.5% to approximately RMB442.3 million for the year ended 31 December 2019 from approximately RMB336.2 million in 2018, and the Group’s gross profit margin increased to 78.3% for the year ended 31 December 2019 from 76.5% in 2018. The Group’s profit before income tax decreased by approximately 2.6% from approximately RMB253.1 million for the year ended 31 December 2018 to approximately RMB246.7 million in 2019. The Group’s profit and total comprehensive income for the year decreased by approximately 4.5% from approximately RMB216.5 million for the year ended 31 December 2018 to approximately RMB206.8 million in 2019. The Group’s profit margin was 49.3% and 36.6% for the years ended 31 December 2018 and 2019, respectively. Business Review The Group is a leading localized mobile card and board game developer and operator in China with a special focus on localized Mahjong and poker games. The Group also develops and operates casual games and beginning in August 2018, leveraging its large player base, the Group commenced the distribution of third-party mobile games. In 2017, the Group recognized the increasing need for socialising functions in mobile games and introduced private game room function to some of its Mahjong and poker game products. In 2018, the Group broadened its income stream by inserting certain in-game advertisement slots in its mini-programs and shared the income, typically measured by user clicks, with those miniprogram platform operators, mainly WeChat. Most of the Group’s games, including the most popular game categories of Mahjong and Fight the Landlord (鬥地主), are the recreation of classic games. The Group has developed different Mahjong and poker game variations featured with localized and regional game rules, scoring rules and slang terms, appealing to various traditions and preferences of players from different locations. During 2019, the Group has successfully expanded the geographic coverage of its games in China. The Group currently offers Mahjong game variations that are localized to cover at least some counties in 26 provinces and municipalities in China. In 2019, the Group has launched 38 new Mahjong game variations and 14 new poker game variations. In terms of financial performance, the Group continued its robust growth in 2019. The Group’s revenue and gross profit for the year ended 31 December 2019 were approximately RMB565.0 million and RMB442.3 million, representing an increase of approximately 28.5% and 31.5%, respectively as compared with last year, primarily due to increase in advertising revenue, the expansion of game portfolio and the distribution of third-party mobile games. During 2019, the Group recognized advertising revenue of approximately RMB61.8 million as it incentivized players by giving free private game room cards and virtual tokens through clicks on advertisements thereby increasing its advertising revenue. Such measure has led to an 8% drop in revenue from private game room cards compared to 2018. The Group’s adjusted net profit, which does not take into account share-based payment expenses of approximately RMB82.2 million and listing expenses of RMB17.8 million was approximately RMB306.8 million for the year ended 31 December 2019, representing an increase of approximately 32.1% from approximately RMB232.2 million for the year ended 31 December 2018. In terms of business development, the Group continued to expand its game portfolio, and enhance its marketing capabilities and technology infrastructure to grow its player base, increase their stickiness and stimulate their in-game purchases. As at 31 December 2019, the Group’s cumulative registered players reached 163,403,629, representing an increase of 68.3% compared with 31 December 2018. The Group’s DAUs increased to 5,644,751 as at 31 December 2019, representing a growth of 8.4%, as compared with 31 December 2018. The Group’s paying players reached 4,142,772 for the year ended 31 December 2019, representing a growth of 28.4% as compared with the year ended 31 December 2018 In addition, the Company was successfully listed on the Main Board of The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) on 4 July 2019 (the “Listing Date”), marking a milestone for the Group in improving its capital strength and corporate governance as well as enhancing its competitive edge, which laid a solid foundation for the Group’s future development. Prospects: Following the outbreak of the COVID-19 virus in December 2019, the People’s Republic of China (the “PRC”) government has implemented various measures including travel restrictions to prevent the spread of the COVID-19 virus. Such measures have resulted in significant increase in the Group’s DAUs and sales in virtual tokens and private game room cards in the first two months of 2020 as the general public spend more time at home. The Company also benefitted from lower cost of promotion of its games through online social media platforms as the active users for these social media platforms increased. Although the measures relating to travel restrictions have to a large extent impeded the Group’s offline game promotion activities, the Company believes that there will be limited negative impact on its business considering the significant increase in player base in the first two months of 2020. The Company believes that the effects of the COVID-19 virus on its business are temporary and will closely monitor any further development. During 2020, the Group will continue its efforts to further solidify its leading position in the localized card and board game industry in China by continuing the following strategies: Further develop the Group’s advertising revenue. The Group will continue to cooperate with other platform operators to insert in-game advertisement slots. In addition, leveraging its user traffic, the Group plans to offer advertisement slots on its integrated game platform. Utilising its data analytical capabilities, the Group will continue to develop strategies including analysing the frequency and timing of advertisements shown to players in order to optimise advertising revenue. Further develop and optimize the Group’s game portfolio to boost player stickiness. The Group plans to expand its geographic coverage in China by leveraging its established brand name and developing additional localized regional game variations. The Group aims to expand the coverage of its localized game variations to the entire country, excluding Taiwan, Tibet, Qinghai, Xinjiang, Shanghai, Guangzhou and Shenzhen. Moreover, the Group also intends to introduce more casual games to amplify its overall game portfolio and attract players with different interests Continue to strengthen research and development and technology infrastructure. The Group will increase its investments in technologies to further strengthen its game development capability and infrastructure, with a particular focus on enhancing game features and improving player experience, which in turn helps retain players and increase player stickiness. The Group will continue to develop HTML5 versions and other potential mini-programs for its game products which are connected to various HTML5-enabled social platforms and websites. Enhance marketing capabilities and improve brand image. The Group plans to invest in promotion activities, placing advertisements on social media platforms, third party websites, Apps and TV, as well as sponsoring various online and offline game tournaments to increase its presence and promote its brand. Continue to explore acquisition opportunities. On 29 October 2019, the Company entered into a non legally-binding memorandum of understanding pursuant to which the Company expressed an interest to purchase the entire equity interest in a company which is principally engaged in the development and operation of card and board games, with a focus on localized Mahjong games and private game room cards business in a number of provinces in the northern part of the PRC. As at the date of this announcement, the Company is conducting due diligence on the such company and no definitive agreement has been entered into with respect to the potential acquisition. The Company will continue with the due diligence and assessment of such potential acquisition. For further details, please refer to the paragraph headed “Management Discussion and Analysis — Material acquisitions and future plans for major investment”. In 2020, other than the potential acquisition as disclosed above, the Group will continue to explore complementary partnership or acquisition opportunities of small to medium-sized mobile games developers and operators which can enhance its game-related sourcing, development and operation capabilities and complement its experience in the gaming market.

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