On April 19, Sanqi Mutual Entertainment released its 2023 annual report and 2024 first quarter performance forecast. According to the announcement, the company will achieve operating income of 16.547 billion yuan in 2023 and net profit attributable to the parent company of 2.659 billion yuan, and the operating income is expected to increase by more than 25% year-on-year in the first quarter of 2024, and the net profit attributable to the parent company is expected to be 600 million yuan to 650 million yuan, which is expected to increase by 30%-40% quarter-on-quarter. At the same time, Sanqi Mutual Entertainment announced the profit distribution plan for 2023, which intends to distribute cash dividends of 3.70 yuan (tax included) to all shareholders for every 10 shares, and the amount of the dividend plan for 2023 is expected to be 820 million yuan.
It is worth noting that the company also said that it will submit to the general meeting of shareholders to authorize the board of directors to handle the interim profit distribution in 2024, and intends to distribute dividends in the first quarter, half year and third quarter of 2024 in combination with undistributed profits and current performance, with dividends of no more than 500 million yuan per period and a total dividend of no more than 1.5 billion yuan.
This initiative intends to increase the dividend frequency of Sanqi Mutual Entertainment from the original semi-annual to once a quarter, which fully reflects the company's awareness of actively strengthening the return to shareholders and promoting the concept of returning shareholders and value creation.
[More than 40 reserve products are ready to go, and the overseas business ranks in the first echelon of the industry]
In 2023, Sanqi Mutual Entertainment will have as many as 8 products with an average monthly turnover of more than 100 million yuan in operation worldwide, and the highest monthly turnover of mobile games published worldwide will exceed 2.3 billion yuan.
At present, the company has reserved more than 40 self-developed or agent mobile games, including "Codename Douluo MMO", "Codename DQ", "Time Grocery Store", "Son-in-law", "Mecha Domination", etc., covering diversified categories and themes, and plans to launch them to the market one after another, which will inject new impetus into business development.
In order to explore user needs and market growth points, Sanqi Mutual Entertainment continued to break through the operation of game categories, and on the basis of the four cornerstone categories of MMORPG, SLG, cards, and simulation management, it developed light game genres such as RPG and casual puzzles, and benefited from the successful practice of the company's "self-research + agency" model, creating a continuous and rich product matrix of the company.
On the one hand, the company has consolidated its self-developed brand, paid attention to the details of gameplay design, art quality, music effects and other details, and continued to invest in product iteration and user experience improvement.
While implementing the strategy of "high-quality" and "diversification", the company has always been firm in the pace of going overseas and adhered to the strategy of "globalization". In the context of increasingly fierce competition in overseas markets and the increasing difficulty of going overseas, the company's overseas business still maintains a steady development trend. In the past five years, the company's overseas operating income has increased from 1.049 billion yuan in 2019 to 5.807 billion yuan in 2023.
According to Sensor Tower data, the company has been shortlisted as one of the top three in the 2023 China Mobile Game Publishers' Overseas Revenue List, and has formed a product matrix based on MMORPG, SLG, cards, and simulation management in the global market, and has launched a number of benchmark products for going overseas.
In particular, since its launch in 2020, Puzzles & Survival, a phenomenal product that integrates the "match-3 + SLG" gameplay, has maintained a strong market vitality with its innovative game category integration and cultural integration, and has refreshed the monthly peak turnover record in April 2023, with a cumulative turnover of more than 10 billion yuan as of February 2024. In addition, on the basis of the original four cornerstone categories, the company continues to explore overseas market opportunities in more diversified categories, such as the casual idle mobile game "Little Demon Asks" has achieved good performance in many overseas markets due to its interesting gameplay, localized publicity and theme packaging.
["AI three-step" strategy to promote and seize the industry's scientific and technological opportunities]
In recent years, AI has been regarded as an important technological revolution to reshape "game productivity", and major game companies have deployed it. Sanqi Mutual Entertainment proposed the "AI three-step" strategy in its annual report. The first step is to release the AI application first, and gradually integrate it into each business link. The second step is to realize tooling and modularization based on the accumulation in the early stage, and build a more automated and intelligent game industrialization pipeline. The third step is to explore more possibilities for AI to enrich gameplay.
Since 2018, Sanqi Mutual Entertainment has begun to explore the application of AI in game industrialization, and has independently developed nine mid-platform products and established a mature game industrialization pipeline.
For example, the company's self-developed art design center "Turing" effectively promotes the collaborative management of art processes on the creative side, the preservation and retrieval of art assets and the intelligent generation of 2D images, which greatly improves the efficiency of 2D art work, and the total output of AI-2D drawings per business line exceeds 280,000 per month, saving 60%-80% of man-hours in the original painting of characters. On the distribution side, the company's digital and intelligent products have been put into use since they were put into use, effectively shortening the time taken to advertise game products, and its efficiency has reached 10 times that of the past. On the R&D side, the company has carried out a series of technical research and applications based on the intelligent R&D center "Cupid", including AI balance testing and the use of AI algorithms to achieve high-precision and high-performance motion capture, effectively improving R&D efficiency and quality.
At present, the company has further built an internal AI Agent platform to improve the independent decision-making ability and collaborative office efficiency of digital and intelligent products. The company has realized "workstation-level" AI services, and every employee can enjoy the convenience of AI.
In terms of exploring more possibilities for AI to enrich gameplay, the company is fully embracing the AI wave, and continues to research more novel gameplay and innovative experiences internally, including studying ways to recommend and generate players' preferred images, elements, and gameplay through AIGC, so as to lower the threshold for creation, help players participate in creation, and explore the possibility of creating a non-linear game flow experience.
At the same time, in addition to independent exploration and internal incubation, the company also explores industry opportunities in the field of AI through technology investment, directly or indirectly investing in a number of high-quality technology companies including Zhipu Huazhang, Shenyan Technology, Silicon Heart Technology, Chenjing Technology, YAHAHA, Thunderbird Innovation, Yingmu, Suiguang, etc., to maintain close attention to hardware and technology development, and continue to promote cutting-edge technology research and development and application exploration.
[The first continuous quarterly dividend plan is proposed to further increase the frequency of dividends]
Sanqi Mutual Entertainment said that the company will propose to the general meeting of shareholders to authorize the board of directors to handle the interim profit distribution in 2024, and intends to distribute dividends in the first quarter, half year and third quarter of 2024 in combination with undistributed profits and current performance, with no more than 500 million yuan per period and a total of no more than 1.5 billion yuan. This measure intends to increase the dividend frequency of Sanqi Mutual Entertainment from the original semi-annual to quarterly, reflecting the company's great importance to shareholders' rights and interests.
In addition, the company's annual report disclosed the dividend plan for 2023 of about 820 million yuan, plus the previous dividend amount of 992 million yuan in the first half of 2023, the total dividend in 2023 accounted for 68% of the annual net profit attributable to the parent company. The cumulative dividend amount in the past three fiscal years reached 4.73 billion yuan.
Sanqi Mutual Entertainment has been actively safeguarding the company's value and shareholders' interests, and has taken multiple measures in parallel to strengthen shareholder returns and boost investor confidence. At the end of 2023, the company announced that it would use 100 million yuan to 200 million yuan of its own funds to repurchase shares, and the repurchased shares will be used to cancel and reduce the registered capital. In this repurchase, the first repurchase of about 100 million yuan has been completed in January 2024, and the repurchase plan is still continuing. According to statistics, from 2021 to March 31, 2024, the total amount of the company's repurchase has exceeded 700 million yuan. At the same time, in order to further enhance the market's confidence in the company's prospects, a number of core executives of Sanqi Mutual Entertainment increased their holdings of the company's shares with their own funds from the end of 2023 to the beginning of 2024, demonstrating the recognition and confidence of the company's management in the development of the company and the industry.
In the past year, the State Council has made a series of decisions and arrangements to promote the high-quality development of the capital market, and issued relevant policies to give clear instructions on the market value management and dividend supervision of listed companies.
The 2024 consecutive quarterly dividend plan to be implemented by Sanqi Mutual Entertainment this time is not only a positive response to policy guidelines, but also reflects the company's responsibility and demonstrates the company's great sincerity in increasing investor returns and sharing operating results with shareholders. Sanqi Mutual Entertainment said that it will continue to bring more generous returns to shareholders through stable business strategies and continuous value creation, and continue to contribute to the high-quality development of the capital market.
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