The right-hand man of Zhujiang Investment Management, a tycoon in the e-sports circle boss Zhu Yihang, Jiang Yukai has entered the board of directors, and CMGE (00302) may be brewing capital operation, and the two sides seem to be vigorously promoting further in-depth business cooperation.
Zhitong Financial APP learned that on April 22, CMGE announced that its shareholder Pearl River Investment Management would send Jiang Yukai to join the board of directors of CMGE as a non-executive director, and after his joining, the board of directors of CMGE will consist of eight members. Jiang Yukai is the investment director of Pearl River Investment Management, and has been responsible for the equity investment and M&A and private equity investment business of Pearl River Investment Management, and has led a number of project investments, such as leading the completion of the equity acquisition of Hechuang Automobile, etc., and has rich investment experience, project resources and contacts in the capital market.
Pearl River Investment Management, the company behind Jiang Yukai, has a development history of more than 20 years, with assets of more than 64 billion yuan, and a wide range of investment fields, involving large-scale infrastructure and new energy projects. Zhu Yihang, the actual controller of Pearl River Investment Management, is a veritable e-sports boss, because of his love, he founded the EDG e-sports club in September 2013, and established the Chaojing Group in 2016, and since then the investment territory in e-sports has been expanding, and has been involved in e-sports education, e-sports theme industrial parks, MCN institutions and animation IP pan-entertainment sectors and other businesses, aiming to build a comprehensive enterprise of e-sports game pan-entertainment.
Affected by the incident, the stock price of CMGE rose sharply the next day, and investors rushed to raise funds, up 12.75% as of the close.
Appointed representatives to the board of directors, a firm strategic investor of CMGE
Zhitong Financial APP learned that Zhu Yihang and CMGE became acquainted in April 2021, when Zhu Yihang's Wide Fortune, Bilibili and Shengtian Network jointly participated in the subscription of the shares allocated and issued by CMGE, of which Wide Fortune subscribed for 56.4 million shares, which was called a combination of vertical and horizontal in the game circle by the market. Zhu Yihang has been holding it for a long time as a strategic investor and has not reduced his holdings so far.
In fact, the general investment type can be divided into financial investment and strategic investment, financial investment is fast in and out, mainly to obtain market value premium, the most common such as in the primary market and Pre IPO investment, do not participate in the company's decision-making, promote the target after the listing to cash out, earn the valuation difference, and strategic investment based on their own business and industrial layout considerations, not limited to the primary and secondary markets, long-term holding of the target, according to the degree of attention to choose whether to participate in the decision-making.
Zhu Yihang's layout in the game field for many years has formed a relatively complete e-sports industry ecology, and has a great complementarity and synergy with CMGE's business. At the same time, it also shows that Zhu Yihang or the strategic shareholding in CMGE has increased, and it is not excluded that the two sides will increase cooperation and shareholding ties in the future, deeply bind, and enhance the voice of Wide Fortune Wide Fortune.
Jiang Yukai's appointment as a non-executive director of CMGE indicates that Zhu Yihang will further deepen the investment layout of the game and IP business through CMGE, and his e-sports pan-entertainment and family-owned Hopson commercial offline shopping malls will carry out all-round deepening cooperation with CMGE. For CMGE, it will receive multiple assistance from resources and the market, coupled with the coupling effect of the business, to further enhance the company's performance capabilities.
It is worth noting that Jiang Yukai is an expert in the investment circle and is expected to participate in the resource integration and business expansion of CMGE and Chaojing Group.
Jiang Yukai once said that since the beginning of this year, the product cycle and industry prosperity of the domestic game industry have continued to improve, the value revaluation of the game industry has gradually started, and he is optimistic about the long-term reshaping of game production methods by AI technology, and CMGE, as a Hong Kong stock game company with the core advantages of AI+IP+ game products, will also launch its self-developed fist product "Sword and Fairy World" this year, firmly believing that the company's long-term growth value will be gradually recognized and will bring rich returns to investors.
The fundamentals are strong, and AI-empowered self-owned IP is back to growth
In addition to business synergy and the strategic deployment of the industrial chain, the most important thing is the strong fundamentals of CMGE. Judging from the past performance, before 2021, the company's performance maintained its growth ability, in 2022, due to the impact of the epidemic and the edition number policy, some R&D projects were postponed to varying degrees and declined, and in 2023, the industry environment will gradually improve, and the licensed and self-owned IP will regain growth.
In 2023, the company's operating income will be 2.606 billion yuan, of which the revenue from licensed and self-owned IP games will be 1.631 billion yuan, a year-on-year increase of 17.5%, returning to the double-digit growth track. During the period, the company's licensed and self-owned IP, game developer-owned IP and non-IP game revenue contributed 62.6%, 2.6% and 34.8% respectively.
CMGE has long regarded IP game strategy as the core strategy of the company, believing that high-quality IP can effectively reduce the cost of customer acquisition and extend the life cycle of games, which is an important resource and barrier to competition in the game industry. Relying on its own advantageous IP resources, the company continues to make efforts in the three major business segments of IP game research and development and global distribution, its own IP operation and the national style metaverse platform, focusing on creating high-quality IP game products and disseminating high-quality content of excellent Chinese culture.
According to the disclosure, a number of games that the company plans to release have successfully obtained version numbers in 2023, and a number of new games such as "The Legend of New Sword and Fairy: Sword Swinging Love", "Ultraman: Gathering", "Devouring the Starry Sky: Dawn", and "My Edgeworth Diary" will be officially launched in 2023 and have performed eye-catching. For example, after the launch of "The Legend of New Sword and Fairy: Sword Swinging Love", it won the first place in the free list of Apple stores, the first place in the best-selling list of Apple stores in Hong Kong and Macau, and the third place in the best-selling list of Apple stores in Taiwan in the first month of its launch in Chinese mainland, Hong Kong, Macao and Taiwan.
In fact, CMGE's blockbuster project lies in the national style metaverse platform - "Sword and Fairy World", which will be the soul of the AI era. "Sword and Fairy World" is the first open world game with the theme of Chinese style Xianxia in China, which obtained the version number in June 2023, and has already begun to launch pre-order activities, with the number of pre-orders exceeding 4 million, and two tests have been conducted in 2023, and the billing test to verify the monetization ability of the product before the launch is also about to begin, and is scheduled to be officially launched in 2024.
The game is based on technological innovation and the application of AIGC, and the virtual world created will bring players a huge sense of immersion and realism, and comprehensively improve the realism of the environment through a number of technical applications, and enhance the sense of immersion in the virtual world. In addition, the AI non-gamer characters (NPCs) in "Sword and Fairy World" will behave and talk accordingly according to the natural environment, forming a natural and real social ecology and improving the realism of the virtual world. Jiang Yukai once focused on CMGE's "Sword and Fairy World", optimistic about the release of growth value.
It is worth mentioning that CMGE has actively stepped up its efforts to explore overseas markets, focusing on Hong Kong, Macao, Taiwan, Japan, South Korea, Europe and the United States, and continuously launching excellent games to expand the scale of revenue in overseas markets. In 2024, the company will launch a number of blockbuster IP games in domestic and overseas markets, and will continue to vigorously support the development of independent research and development projects.
Pay attention to capital operation, the future is worth looking forward to
Zhu Yihang appointed a representative to participate in the company's decision-making level, and fully affirmed the prospect of CMGE, based on its abundant resources and financial advantages, the market speculated that there would be capital actions. In fact, on March 28, CMGE announced that the board of directors decided to use the share repurchase authorization to use up to HK$100 million to repurchase shares in the open market, and has continuously repurchased shares, and now less than a month Jiang Yukai joined the board of directors, and this series of events seems to be somehow related.
The valuation of CMGE is indeed very low, affected by the market, the epidemic and the version number policy, the valuation of the game sector continues to bottom, and the company is no exception, but Zhu Yihang's deep participation is reversing the trend. On the one hand, the market's expectations have changed, and the logic driven by the sector has gradually changed to the expectation of performance and resource integration; on the other hand, it can be seen from the market's vote that there are not many investors who are waiting and seeing, and the company's undervaluation is expected to continue to be favored by large funds.
In addition, some investment banks have also begun to pay attention to the company, such as SDIC Securities, believing that the company's game product line is becoming more and more abundant, and the launch of new games will boost the company's steady growth, while the company continues to deepen its global layout to maximize the commercial value of IP, and the blockbuster product "Sword and Fairy World" is ready to launch, and also gives a buy rating, and CMB International is optimistic about the company's development prospects in 2024, with an expected revenue increase of 32% year-on-year , optimistic about the company's overseas expansion plans, give a buy rating, and the target price is HK$2.9, which is 152.2% higher than the current price
On the whole, Zhu Yihang's gradual participation in the company's decision-making from a strategic investor means that the equity and business partnership will be deeply bound, the former has strong resources and financial advantages, and the latter has a strong IP game ecology, and the complementary advantages drive the business layout and development of both parties. CMGE's fundamentals are strong, its own IP has returned to the growth channel, and it has capital operation expectations, which is worth looking forward to in the future.