Intern: Liao Yiyi
The celadon game (6633.HK), incubated by the king of profitability in the A-share game sector, 603444.SH, broke on the first day of listing. At the opening of the market on December 16, Celadon Games was quoted at HK$10.2 per share, down nearly 9% from the issue price of HK$11.2 per share. By the close, Celadon Games shares were down 4.64 percent.
Before the listing, Gigabit held 21.37% of the shares of Celadon Games, alibaba, Tencent and B station each held 4.99%; after the listing, Gigabit will indirectly hold 128 million ordinary shares of Celadon Games, with a shareholding ratio of 18.72%.
As the first game company listed on the Hong Kong Stock Exchange during the year, Celadon Games' revenue in the past three years was 0.98 billion yuan, 89 million yuan and 1.227 billion yuan, and net profit was 0.39 billion yuan, 0.22 billion yuan and 166 million yuan, respectively.
Why doesn't the market buy such a "small and beautiful" company? The reason may be hidden in the word "single paragraph". Relying on the single game "The Strongest Snail", Celadon Games completed the rapid growth of 2020 performance, and also supported 90% of the company's total revenue. At present, Celadon Games operates 6 mobile games and has a reserve of 10 mobile games. However, in terms of revenue, the performance of the 6 games "The Strongest Snail", "Lantern and Dungeon" and "Ares Virus" in 2021 has increased compared with 2020, while the remaining 3 have declined.
In 2019, 2020 and the first half of 2021, Celadon Game sales and marketing expenses were $16.8 million, $559.2 million and $245.1 million, respectively. Among them, the marketing and promotion expenses (including traffic acquisition and brand marketing and promotion expenses) paid to online and offline marketing service providers accounted for 67.3%, 93.7% and 95.1% of the total sales and marketing expenses respectively. In 2020 and the first half of this year, the R&D expenditure of Celadon games was 146.1 million yuan and 18 million yuan, accounting for 11.9% and 2.4% of the total revenue, respectively, and the R&D expenditure was much smaller than the marketing expense.
Source: Bulletin
Judging from the annual report of A-share gigabit, Celadon Games is inextricably linked to it both in business and investment. Yang Xu, the founder and CEO of Celadon Games, was an early employee of Gigabit and participated in the production of gigabit's fist products such as "Ask", "Wending" and other large-scale game products. In 2012, at the age of 31, Yang Xu left Gigabit to create Celadon Games on his own. In December 2013, Gigabit invested 10 million yuan to become the second largest shareholder of Celadon Games, with a shareholding ratio of 33.21%.
In addition, the related party transactions between gigabits and celadon games are also worth paying attention to. According to Gigabit's 2020 annual report, its other business operating income, operating costs and gross profit margin in 2020 increased compared with the previous year, mainly due to the promotion service provided for the celadon game "The Strongest Snail".
Source: Gigabit Annual Report
Gigabit sells its game operation services to Celadon Digital, while Celadon sells game product licenses to Gigabit.
From the perspective of equity, Gigabit transferred part of the equity of Celadon Digital in the second quarter of 2021, with a total transaction consideration of 300 million yuan, increasing the company's net profit by about 167 million yuan. In the 2021 gigabit semi-annual report, the ending balance of the long-term equity investment in Celadon Games increased by about 44.78 million yuan compared with the beginning of the period.
Source: Gigabit Bulletin
In addition to backing the A-share "game Mao" gigabit, Celadon Games shareholders also include Tencent, Alibaba, Bilibili, Boyu Capital, etc., and the lineup is very luxurious. Whether it is in game production, publishing or product promotion, shareholders can help them in the future. But for a game company, game development strength is important. Whether the celadon tour can become a second "gigabit" will take time to verify.