The first game company to go public in Hong Kong this year, Qingci Games has been a hit with local investors, attracting HK$340 million through margin financing, data from local broker showed, making its retail tranche nearly two times oversubscribed as its books closed last Thursday.
The Chinese mobile games developer was offering 85 million shares to raise up to HK$1.19 billion with an indicative price range from HK$11.2 to HK$14 apiece. It reportedly has priced its shares at HK$11.2, the bottom of the indicative range, and will makes its trading debut this Thursday.
Founded in 2012, Qingci Games is backed by Tencent (0700), Alibaba (9988), Bilibili (9626), and Boyu Capital.
Six cornerstone investors - including Tencent and Boyu - have subscribed for a total of US$70 million (HK$546 million) worth of new shares.
MARVELLOUS DEBUT
Qingci Games has six mobile games in its portfolio including its hit title The Marvelous Snail, which chalked up gross billings exceeding 400 million yuan (HK$495.29 million) in the first month of its launch in June 2020, according to the company's prospectus.
In 2020, The Marvelous Snail earned 1.17 billion yuan, accounting for 95.3 percent of the firm's total revenue and was ranked second on Apple's iOS Bestseller Games List in China in 2020.
The game earned 516.5 million yuan or 67.7 percent of total revenues in the first half of this year, making it the main driver for profit growth since its launch, the prospectus said.
Since it currently generates over 90 percent of its revenues from best-selling games which have limited life-cycles, Qingci warns that revenue and net profit may not grow at a rate comparable to its past record.
The warning comes after the title experienced a slowdown in revenue growth in the first half of 2021 compared to the year 2020, as it moved to the maturity stage.
The game's average monthly active users also dropped from 4.42 million for the June-December period of 2020 to 1.48 million in the first half of 2021 while the average monthly paid users slid from 701,000 to 257,000 over the same period.
The Marvelous Snail has an expected life-cycle of 96 months in the mainland, which means that it still has roughly six-and-a-half years of earning potential.
Qingci's five other games are Gumballs & Dungeons, Lantern and Dungeon, Ares Virus, Eternal Adventure and Yu Gong 3, and it plans to launch the first local version of its 10 new mobile games in 2022 and 2023.
According to the survey of players conducted by Frost & Sullivan in April 2021, nearly 76 percent of Qingci's players were aged 30 or below, higher than the industry average of 65 percent.
In 2020, net profit fell by 40 percent to 93.8 million yuan year-on-year, mainly due to significant selling and marketing expenses to prepare for the launch of The Marvelous Snail, which was in operation for only around a week in the first half of the year.
Meanwhile, as Beijing has been stepping up efforts to prevent minors from overindulging in online games, Qingci said that it has asked all players to register using their real names to comply with the regulations.
In the first half of 2021, its gross billings from minors were around 857,000 yuan, or 0.2 percent of total revenue from paying players.
The average revenue per month per paying user for the first half of 2021 was 221 yuan, with 67.98 million registered players.
First-half revenue skyrocketed by 7.61 times to 762.95 million yuan over the same period last year.
Qingci plans to use 35 percent of the net proceeds to expand its games portfolio and invest in the game research and development and related technologies, 25 percent to expand its business overseas, 15 percent to strengthen its game publishing and operation capabilities and another 15 percent for strategic investments and acquisitions of upstream and downstream companies.
The remaining 10 percent is for working capital and general corporate purposes.
GAME ON: executive director and chief executive Huang Zhiqiang, left, and executive director and chief financial officer Liu Siming launch the offering.
