The company is an online board game developer and operator, and has a leading position in the mobile game business in the company's biggest target markets (i.e. China, Hong Kong, Taiwan and Thailand). At the last practical date, the company had over 349.8 million registered players, including 248.5 million cumulative registered players for the company's online games and 10.13 million registered players for mobile games, distributed in more than 100 countries and regions (calculated based on IP addresses). According to the report (or iResearch Report) compiled by the company commissioned by iResearch, based on the overall Chinese online board game market size in 2012, in terms of revenue, the company has a 23.3% market share in the Chinese online board game market. Investors are recommended to subscribe in small orders. Company advantages (1) The company is a leading developer and operator of online board games. It places special emphasis on mobile games and has established a leading position in the target mobile board game market. The company is in an advantageous position to further seize the huge growth opportunities brought by the company's pioneering advantage and rapidly growing mobile game market locations at home and abroad; (2) The company provides games in various languages, and at the same time adds features and improvements that cater to local culture and preferences. The company's paying players come from more than 80 countries and regions around the world, making up a huge global business. The company's multi-level game distribution platform successfully promoted and promoted the company's games in Chinese and overseas markets; (3) The company provided players with highly engaging game design, installation and functions through a simple and easy to use interface, enabling players to obtain an extraordinary gaming experience. Precise data analysis enables the company to continuously improve games, enhance player experience, and strengthen player loyalty; (4) The company has a large and ever-expanding player base, with a cumulative total of over 309.0 million registered players on June 30, 2013. The company has established an effective business model. By providing a diverse range of virtual items and in-game activities, the company earns revenue from the ever-expanding Pangda registered player base; (5) The company has complete technical infrastructure (including a proprietary liberal arts game development engine supporting the development of cross-platform games and cloud computing infrastructure with more than 370 servers around the world), providing a stable, low-latency connection, which can accommodate a large number of concurrent online players; (6) The company has experienced and far-sighted management The team has extensive industry experience, is close to market trends, and is professional in operation Rich in knowledge, the company successfully adapts to the ever-changing industry and competitive landscape. Industry Overview Since entering the 21st century, the online game market has developed rapidly, driven by favorable government policies, an ever-expanding player base, increased competition among domestic and foreign game developers, and increased capital investment. In particular, the “free value-added” model has been popular since 2006. Under the free value-added model, online games can be downloaded and played for free, while players pay for value-added services and features. This commercial model enables online games to attract a large player base in a short period of time. Furthermore, with the daily popularity of social networking platforms and the increasing number of games that can be played on mobile devices, the purchases made by online game players are becoming more diversified. Chinese online game players have gradually matured, and the demand for high-quality online games is increasing. According to iResearch's report, in terms of revenue (excluding advertising revenue), the total size of China's online gaming market increased from RMB 13.3 billion in 2007 to RMB 66.2 billion in 2012, and is expected to reach RMB 130.8 billion in 2016. There are three main forms of online games in China, namely client-side games, online games, and mobile games. Client games (games that require players to download and install client software) have been the main form of online gaming in China for a long time. The market size increased from RMB 12.5 billion in 2007 to RMB 48.5 billion in 2012. The development cycle of client-side games is generally very long and expensive, leading to a small number of large traditional game developers currently taking a dominant position in the market. Furthermore, the development of mobile games in China is facing many challenges, such as lack of creativity, high product similarity, and market saturation. According to iResearch's report, it is estimated that the customer gaming market size will increase from RMB 48.5 billion in 2012 to RMB 80.4 billion in 2016, and the estimated annual growth rate will drop from 18.5% to 10.5%. According to iResearch's report, due to the increasing increase and popularity of other forms of online games, the market share of customer games is expected to drop from about 93.7% in 2007 to about 61.4% in 2016. According to iResearch's report, online games in 2012 (games that can be played on a web browser without downloading and installing client software) accounted for 14.8% of China's total online game market share in terms of revenue, and it is expected to increase to about 18.8% in 2016. The total online game market size in 2012 was approximately RMB 7.6 billion, and it is expected to increase to RMB 16.8 billion in 2016. Compared with developing client-side games, many Internet companies are more active in developing online games, so competition in this industry has intensified. The development history of mobile games in China is relatively short, but there has been a significant increase in recent years. According to iResearch's report, in terms of revenue, the market share of mobile games in the entire online gaming market increased from about 5.2 percent in 2007 to about 11.9 percent in 2012, and is expected to further increase to 19.7% in 2016. In the past, mobile games in China were dominated by games developed for non-intelligent mobile software platforms (such as Symbian and Java languages). Mobile games that are not smart mobile devices are generally pre-installed, and their functionality and expandability are limited. There are many types of non-intelligent mobile games, including board games, role-playing games, and action games. However, the player experience, quality, and convenience of non-smart mobile games are far inferior to smart mobile games. Due to the launch of innovative mobile devices and healthy ecosystems, a large number of developers (including individuals) are participating in the development of mobile games. In 2012, based on the total revenue of mobile games (approximately RMB 7.9 billion), mobile games on “smart” devices (mainly smart phones and tablets) had a market share of 24%. iResearch reports anticipate that the market size of Chinese smart device games will increase to about RMB 17.8 billion in 2016, which is equivalent to about 69.1% of the total revenue of mobile games in China in 2016. According to iResearch's report, with the continuous popularity of mobile devices and diversification of mobile games, it is expected that players' time spent on mobile games will continue to increase. Profitability and Financial Figures The company's revenue increased 27.0% from RMB 243.3 million for the six months ended June 30, 2012 to RMB 308.9 million for the six months ended June 30, 2013, mainly due to (i) revenue from mobile gaming increasing by 172.1% from RMB 34.1 million to RMB 92.8 million and (ii) revenue from online gaming increased by 3.2% from RMB 209.3 million to RMB 216.1 million. Continuing will be a major strategy The focus is on mobile games as a result of the continuous increase in language versions of games and the number of paying players. Gross profit increased by 31.6% from RMB 145.3 million for the six months ended June 30, 2012 to RMB 191.2 million for the six months ended June 30, 2013. Furthermore, the company's gross margin increased from 59.7% in the six months ended June 30, 2012 to 61.9% for the six months ended June 30, 2013, mainly due to an increase in revenue from the sale of prepaid game point cards (the commission rate is lower than revenue from the two other payment channels). Net profit increased by 3.1% from RMB 68.1 million for the six months ended June 30, 2012 to RMB 70.2 million for the six months ended June 30, 2013. The purpose of the fund-raising is HK$816.2 million (calculated at the median sale price of HK$5.08 per share) of the net proceeds of the capital raising approximately 30% or HK$244.9 million will be used to expand the company's marketing and promotion activities, including hiring more sales and marketing personnel; approximately 30% or HK$244.9 million will be used to expand and enhance the company's game mix, invest in the company's technical infrastructure, and other R&D work; approximately 15% or HK$1224 million will be used for potential mutual acquisition of technology and technology Complementary online gaming or business, partnerships and licensing Opportunity; As of the last practical date, the company has not determined any specific suitable acquisition targets; approximately 15% or HK$122.4 million will be used to establish and expand local business operations in selected overseas markets; the balance of approximately HK$81.6 million (accounting for no more than 10% of net proceeds) will be used to disburse the company's working capital and other general corporate purposes. The valuation is based on the prospectus price of HK$4.55 to 5.60, Liberal Arts Interactive's 2012 price-earnings ratio of 18.2 to 22.4 times, and the price-earnings ratio of 2.6 to 2.8 times. The company is a growth stock. It is characterized by rapid growth, but the probability of failure (Probability of Failure) of simultaneous failure (Probability of Failure) is also relatively high, and there is currently no sufficient past support, so it is purchased with a small order. Risk Factors (1) The majority of the company's revenue is contributed by a small number of games. If the company fails to maintain or enhance the expression of these games or other adverse developments, it will have a significant adverse impact on the company's business and operating performance; (2) the company may be unable to continuously improve existing games, improve the player experience, and launch new high-quality games and services, which may have a significant adverse impact on the company's ability to continue to retain existing players and attract new players; (3) The company's rapid growth during the historical record period cannot be used as an indicator of future growth. The company's operating history is limited, so it is difficult to evaluate the company's growth prospects and growth prospects Future financial results; (4) Company registration Only a small percentage of players are paying players; (5) All of the company's revenue comes from selling virtual items. If the company is unable to effectively promote virtual goods and make suitable pricing, or if this commercial model is no longer commercially viable, the company's operating performance, financial situation and business prospects may be significantly adversely affected; (6) if the company fails to successfully implement a game development strategy focused on mobile games, the company's growth prospects will be affected; (7) the company uses major social networking sites and online application stores to extract most of its revenue. If the company is unable to maintain good relationships with these social networking sites and online app stores, the company's business and operating performance will be adversely affected; (8) the company faces risks associated with third party online payment providers; (9) the company faces risks associated with third party prepaid game card distributors; (10) violates the company's gaming policies (such as selling and purchasing virtual tokens and other virtual items used in the company's games through unauthorized third parties) or will hinder the company's revenue growth; (11) the company's international expansion It exposes the company to risk and uncertainties. If the company fails to effectively manage the company's international expansion, the company's growth rate and prospects may be significantly adversely affected.