Matters:
On August 20, 2013, CITIC Securities Media invited Li Minghui, assistant chairman of Zhongqingbao, to communicate with investors.
Minutes:
First, Li Minghui, assistant chairman of Zhongqingbao, gave a brief introduction to the company's basic situation: the company's recent acquisition announcement involved two targets: Sumo in Shenzhen and Meifeng in Shanghai. Everyone probably knows more about Meifeng and less about Sumo. Sumo is currently in a transition period, and we have a series of incentives in the future. If Sumo's development meets our expectations in the future, it is not ruled out that a relatively high multiple will be used to buy the remaining shares a second time.
Meifeng became famous as “King King 2,” and has been working on mobile game product development for a long time. Previously, she had not been successful on the JAVA route. Overall, no momentum developed, but through the “King 2” product, she suddenly became successful, just like previous game products such as “My Name Is MT,” “Master of the Fish,” and “Fishing Master.” This is the trend in this industry, because it is difficult for a team that has not failed, a team that has not learned from the lessons of the past to seize this market opportunity. Currently, Meifeng is mainly engaged in heavy mobile online game products, which complement our self-developed products of Zhongqingbao. At the same time, we are very optimistic about the increase in Meifeng's performance this year. Meifeng's turnover reached 45 million in July, but this was not reflected in our interim report. This is mainly an issue of account time, because currently mobile games mainly use intermodal transportation with platforms, so the first step in revenue is to enter the channel side and the platform side, and the second step is to enter the CP side's share. In this process, there will be a certain account period. In our current interim report, we only consider the amount actually received. There is a record of unpaid transactions, so there will be a certain difference. The current account period is basically one month, but it will fluctuate between one and two months due to differences in products, share ratio, and platform size. Meifeng's current products are quite comprehensive, and there is some complexity in sorting out the accounts.
Sumo was previously engaged in page game product development, experimented with mobile game development in the 2G era, and achieved some good results. The most important thing about cooperating with Sumo this time is that it will establish closer cooperation with Tencent through the Sumo bond, and the amazing energy that Sumo will soon explode in the future. Tencent holds a certain share in Sumo, and Sumo's products will enter Tencent's gaming platform as soon as possible. Precisely because of Sumo's deep cooperative relationship with Tencent, it has good performance. Through this acquisition, we hope to have closer ties with Tencent, and that in the future, our self-developed products, the acquired company's products, Meifeng products, and Sumo products will enter Tencent through this special channel as soon as possible, forming a intermodal relationship with Tencent.
Within the domestic Internet industry, Tencent and non-Tencent are two different user ecosystems. Through the acquisition of Sumo, we can establish a closer relationship with Tencent. Through our own product line, we can also develop more steadily in non-Tencent ecosystems.
The current overall business layout of Zhongqingbao is to seek victory in the midst of slow progress and stability. We wanted to buy a mobile game company a long time ago, but we didn't announce it until August. This is because we follow two principles: the target must have the same enterprise development genes as China Qingbao; the target must form a good complement to China's Qingbao product, and have a strong product plan in the future, which can gradually maximize this advantage. The acquisition did not reach the mark of asset restructuring; in theory, it would not hinder the continued advancement of the company's strategy.
Some people will ask, why not buy through fixed increases? It mainly takes into account the company's own strategic advancement. This time, we will first buy 51% of the shares in the form of cash, and in subsequent considerations, we will give both parties to the transaction a fairer and more secure trading environment and trading conditions.
Beginning in the second half of last year, Zhongqingbao began a strategic transformation, including mobile games, mobile games, mobile social networking, and overseas business. China Qingbao will not easily develop only a single business model, which is bad for the company itself. Looking at it now, the most popular mobile game product teams have all failed many times and have accumulated rich technical experience in the market. In the mobile game market, the competition is the team. There aren't many good bids on the market right now. What we value most is the team, so that the team can generate more profound and stable value. Had it not been for a tried and tested team with a relatively successful product, then even if today's product is very successful, the team's poor heritage is extremely risky, and this risk is likely to continue to the next product. Currently, the mobile game market is very risky, so China Qingbao will not give up on the mobile game and page game markets. Mobile games can provide a stable source of revenue, because the life cycle of mobile games is relatively long and user behavior habits are in place, and mobile games still have strong life extensibility and revenue sustainability. Page games can provide a high flow of water. Mobile games are our future development direction and can provide explosive revenue. Mobile social networking platforms can cultivate users and greatly reduce user acquisition costs.
Regarding the semi-annual report, there were no new mobile game products launched for the company in the first half of the year, there were 3 new strict products on the page game, and mobile game operating revenue was not reflected in the semi-annual report, because no proprietary products were launched, and the target of the merger and acquisition was not announced at the time. 9 million of mobile game revenue came from previous acquisitions of the two companies, which controlled Xi'an and Beijing Tianyi Xunling's weak-networked mobile game products. As the distributor, we received distribution revenue.
Product line: In the second half of this year, we expect to release more than 50 mobile game weak-connected products, with 6 major mobile game internet-based products. According to data from Battle of Immortals on August 8, we currently have a set of servers, and the number of users retained in a single week is 62%. In the next second half of the year, we will launch our own mobile online game products every month. Sumo and Meifeng both have their own product plans for the second half of the year. Under Zhongqingbao's current system, there will be enough mobile game products from this year to the first half of next year. Furthermore, our 6 products are of different types, and we need to understand the market and users through different types of products. We will calm our minds, observe the market in a more stable state, and understand the users of the market.
Platform-based operation: We all have plans and ideas when it comes to mobile internet applications, game distribution platforms, and media platforms. Rumor has it that we will cooperate with telecom operators. We think that as CP, whether we cooperate with Internet vendors such as 360 or operators such as Mobile MM, the nature of cooperation is the same for us. Of course, mobile phone hardware manufacturers are also included.
