A raft of A-share companies has made ambitious moves to acquire mobile gaming companies in the burgeoning nascent market; Ourpalm shares soared 275.77% YTD

July 4, 2013 Leave a comment

Chinese Mobile Game Companies Come Under Spotlights

By Emma Lee on July 3, 2013

A raft of A-share companies has made ambitious moves to acquire mobile gaming companies in the burgeoning nascent market. Investors saw opportunities in the industry which boasted 286 million subscribers (source in Chinese) as of the end of 2012, boosting the performance of shares related to the sector.

Ourpalm (SZ:300315) announced recently that it would acquire a 100 percent stake in Dovo Technology Inc. , a game developer, with 810 million yuan (source in Chinese). Dovo Technologygenerated 57.08 million yuan of net profit in 2012. Ourpalm is seeking for another acquisition target to expand its gaming empire.Zhejiang Daily Media Group (SH:600633) acquired two gaming subsidiaries under Shanda Group; Datang Telecom (SH:600198) merged Yaowan.com; B-Ray Media (SH:600880) acquired Gamegoo Information Technology and Huayi Brothers (SZ:300027) merged Yinhang Technology.

Moreover, a spate of mobile game shares surged recently. Ourpalm shares soared 275.77 percent on aggregate year-to-date, recording historical records continuously. Zhongqingbao Interaction Network (SZ:300052), an operator of MOM and browser games, soared 211.30 percent in the first half of this year.

The heat even expanded to shares that are remotely related to the mobile game concept, such as Bewinner Communications (SZ:002148), Talkweb Info (SZ:002261), B-Ray Media (SH:600880) and Telling Telecom (SZ:000829).

Although mobile Internet has attracted large amounts of capital injection from both private equity and venture capital, there is still no reliable commercialization mode for the industry to guarantee sustainable profits. The commercialization prospects are blurry even for services with large audiences, such as Weibo, WeChat, Momo and Changba.

Mobile game is seen as one of the first profitable services on smartphones. And there are successful cases. Beijing Chukong Technology’s ISO version of Happy Fisher recorded monthly revenue of 30 million yuan in February this year, according CEO of the company Chen Haozhi. WWII, a mobile game developed by Wistone raked in around 270 million yuan since its release in the latter half of 2009, disclosed Wu Gang, CEO of the firm.

Industry practitioners hold a common view that it is difficult for a single game to achieve success. Around two dozens of games will take 60 percent to 70 percent of the market, while the rest millions of them will sink into oblivion.

Filed under TMT Trends

Unknown's avatarAbout bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

Leave a comment