Empowering game entertainment scenes with technology Lai Chunlin, chairman and CEO of Shengtian Network, explained in detail the three major strategies for future development

Our reporter Zhang Jiazhen reported from Wuhan

"The company will continue to strengthen the integrated operation system of platform, content and service, and focus on the three strategies of 'creating game scenes loved by young people, providing game content loved by young people, and creating a future ecology loved by young people' to dig deep into the value of scenarios and promote the development of enterprises." On May 18, Lai Chunlin, chairman and CEO of Hubei Shengtian Network Technology Co., Ltd. (hereinafter referred to as "Shengtian Network", 300494.SZ), introduced the key directions of future development strategy at the 2022 and 2023 first quarter results presentation.

(Lai Chunlin, chairman and CEO of Shengtian Network, introduced the company's future development strategy.) Interviewee/Figure)

Shengtian Network's previously released "2022 Annual Report" and "2023 First Quarter Report" showed that during the reporting period, the company's revenue and net profit reached record highs. Among them, in 2022, the company's operating income will be 1.658 billion yuan, an increase of 35.83% over the same period in 2021; The net profit attributable to the parent was 222 million yuan, an increase of 77.66% over the same period in 2021. In the first quarter of 2023, the company achieved revenue of 429 million yuan, an increase of 34.50% over the same period in 2022; The net profit attributable to the parent was 73.5113 million yuan, an increase of 40.03% over the same period in 2022.

Lai Chunlin said that under the trend that artificial intelligence has a broad and profound role in promoting the game industry, Shengtian Network will continue to expand and consolidate the existing industrial cooperative relations, while seeking new opportunities and cooperation in emerging industries and market fields. "In the future, the company will deeply explore potential applications and market needs in various fields, promote the transformation and upgrading of its own products and services, create a new entertainment experience, and empower scenes with technology to make entertainment more interesting."

Revenue and net profit reached a new level

Founded in 2006, Shengtian Network is a leading scenario-based digital entertainment platform in China. In recent years, the company has deeply laid out digital entertainment scenarios, built a cross-scenario platform, content and service system with rich industry experience and accurate product positioning, and its main business covers IP operation, game operation and distribution, Internet advertising and value-added and other fields.

According to the annual report data, in 2022, Shengtian Network achieved operating income of 1.658 billion yuan, an increase of 35.83% over the same period in 2021, mainly due to the significant increase in online advertising and value-added business revenue in the current period; The net profit attributable to the parent was 222 million yuan, an increase of 77.66% over the same period in 2021, mainly due to the stable growth of IP operation business and online advertising and value-added business profits.

In addition, according to Wang Junfang, deputy general manager and financial director of Shengtian Network, from the perspective of key financial indicators, all indicators of Shengtian Network performed very well in 2022. In 2022, the company's return on net assets reached 15.71%, achieving sustained and stable growth in the past three years; In 2022, the net cash flow generated by operating activities reached 280 million yuan, an increase of 28.52% year-on-year, far exceeding the amount of the company's net profit, mainly due to the increase in the company's revenue and the shortening of the overall account period.

"The company's operating income and profit have achieved high-quality development, and the business growth has brought sufficient cash inflow, which has provided good support for the company's stable operation and development." Wang Junfang said that in the past three years, the company's key financial indicators have continued to grow, the company's business scale has continued to expand, and its profitability has continued to increase.

The good development momentum of Shengtian Network will also continue in 2023. Financial report data shows that in the first quarter of 2023, the company achieved revenue of 429 million yuan, an increase of 34.50% over the same period in 2022; The net profit attributable to the parent was 73.5113 million yuan, an increase of 40.03% over the same period in 2022.

According to reports, Shengtian network revenue is mainly composed of online advertising and value-added, IP operation and game operation. Among them, online advertising and value-added and IP operation are the two main sources of revenue, accounting for 60.62% and 27.27% of the total revenue in 2022, respectively.

"In 2022, the company vigorously promoted the implementation of various strategic measures, continued to strengthen the integrated operation system of platform, content and service, and achieved good results." For the performance in 2022, Lai Chunlin concluded that first, the company's revenue and net profit have reached a new level, hitting a record high, and the net profit attributable to shareholders of listed companies has increased significantly compared with 2021; Second, the development trend of the Internet game business is good, the efficiency has been greatly improved, the game service sector has developed and expanded, and another profit growth point has been successfully created; Third, new breakthroughs have been made in the expansion of offline scenarios such as e-sports hotels, and Yileto has carried out in-depth cooperation and links with leading enterprises in the industry such as Meituan and Rokid; Fourth, the company has implemented an equity incentive plan and an employee stock ownership plan, demonstrating the company's confidence in development and building a community of corporate interests.

Create new profitable growth points

In recent years, under the strong guidance of national policies, digital technology has continued to develop, the digital economy has shown unprecedented vitality, maintained a good growth momentum, and "Generation Z" has gradually become the backbone of social development and promoted the development of the mobile Internet consumer market.

At the same time, games and technology develop symbiotically and promote each other, and while games promote technological development, technology is also improving the development efficiency and experience of games. The development of virtual reality technology has promoted the emergence of VR/AR games, which not only expands the form of game content, but also accelerates the arrival of digital and real integration scenarios.

In the face of the development trend and opportunities of the game industry, Shengtian Network has also made a lot of planning and deployment. On the basis of doing a good job in the operation of heavyweight game IP such as "Life and Death Fighting 5", "Three Kingdoms 11", "Age of Navigation 4", "True Three Kingdoms Matchless 6" and "True Three Kingdoms Matchless 8", it has built a cloud game platform, an eLetu digital entertainment platform, an e-le game platform and an e-leyou online entertainment platform.

As the "Generation Z" gradually enters the workplace, their online spending power will increase and their willingness to consume online will increase. The growth of "Generation Z" users will promote the new development of the mobile Internet consumer market. According to the QuestMobile 2022 Gen Z Insights Report, the main online activities of the Gen Z group are video, social and gaming entertainment, and their strong interest in gaming has also laid an audience base for the esports industry and will further increase user engagement and attention in esports.

In terms of providing users with a better digital entertainment experience, the game social product "With E-sports" created by Shengtian Network is an APP that mainly meets the social needs of "Generation Z" groups, providing game socialization, sparring, skill sharing and cross-screen interactive functions.

As an important direction for the consumption and experience upgrade of Internet café formats, e-sports hotels are also more in line with the needs of "Generation Z" young people in e-sports experience and social networking. According to the 2022 E-sports Hotel Industry Big Data White Paper, by the end of 2022, the number of professional e-sports hotels in the country has exceeded 16,000, and the total number of hotels including e-sports housing formats has reached 22,000, with a significant growth rate.

In terms of the development of e-sports hotel scenes, the market share of Shengtian network products is expanding. Gao Wei, deputy general manager and secretary of the board of directors of Shengtian Network, said that as early as 2020, the company took the lead in discovering the development trend of the industry and the changes in the demand of e-sports users for e-sports scenarios, laid out the e-sports hotel track in advance, and carried out in-depth cooperation with a number of chain hotels in social entertainment and game services.

"At present, the company's Yiluto platform has covered more than 3,000 e-sports hotels in the form of a product matrix, accounting for about 13.6% of the total." Gao Wei told reporters that the metaverse experience space of e-sports hotels created by the company is also accelerating, and there are already stores testing. "Based on the test feedback, the company will select solutions with innovative and Internet attributes that are popular with Generation Z young people, and gradually deploy them in high-quality offline venues."

"In the future, we will be committed to the construction of the core main track - Internet platform and the ecological construction of Internet pan-entertainment content and services." Lai Chunlin said that horizontally, the company will take the cloud platform as the core, continue to build content, distribution, game services and other related ecological chains, conduct in-depth operations on scenarios, and continuously expand product matrix and service content. Longitudinally, while consolidating its existing business, the company will continue to strengthen its IP and CP capabilities through acquisitions and investments in the upstream and downstream of the Internet pan-entertainment related industry chain, expand the corporate moat, and create new profit growth points.

(Editor: Dong Shuguang Proofreader: Yan Jingning)