Conference Takeaways: POA -Resumption of game license approval supports 2H22 growth, overseas expansion on track
Conference Takeaways: POA CMGE (302 HK, BUY) -Resumption of game license approval supports 2H22 growth, overseas expansion on track
- Resumption of game license approval supports domestic game revenue recovery
- Overseas expansion on track, supported by rich pipeline and wider regions coverage
- Maintain long-term target of 50% revenue from the overseas
Salient Points in Management Presentation:
1. Expect new games to get licenses in 2H22. Management expects at least 2-3 new games to receive licenses in 2H22, which will support its domestic growth in 2H22 and 2023.
2. Overseas expansion on track. In1H22, CMGE launched two major games in the overseas market, the performance was in line with expectations. The company is confident that overseas games to take up c.30% total game revenue this year, supported by the launch of 14 new games in 2H22.
3. Maintain long term target of 50% revenue from overseas. CMGE has invested in 20+ game studios to support its upcoming game pipeline. Besides, it is expanding its overseas coverage from HK, Macao and Taiwan to high-growth regions like US, Southeast Asia. Robust game pipeline and wider overseas coverage will support it getting more market shares in overseas.
Top 3 questions
Q1: What’s the latest updates on game pipeline in 2H22 after the resumption of game license approval in Apr?
- Two key titles that are scheduled to launch in 2H have already received licenses, management expects another 2-3 new games to receive licenses for the domestic market in 2H22. The company has a good track record of consistently launching 20+ games per year before game license suspension. Moreover, CMGE has invested 20+ game studios which will support its upcoming game pipeline for domestic and overseas markets after game license approval back to normal.
Q2: What’s the strategy to achieve the long target of over 50% revenue from overseas market?
- The company has 14 new games to launch in 2H22 and more to come in 2023. It currently generated most of the overseas revenue from HK, Macao and Taiwan, which is relatively small. Starting from this year, it is expanding game coverage into high-growth regions like US, Southeast Asia. The robust game pipeline and wider overseas coverage will support it get more market shares in overseas.
Q3: What are the key changes and findings in the latest two batches of new game licenses?
- Management shared that the license release order is largely based on the submission date. In recent two rounds, the majority of game licenses have been given to casual game genres. Therefore, it expects more hardcore games (e.g. MMORPG) to get approval in next few months. And CMGE will be one of the beneficiaries.