Performance summary: IGG Group achieved revenue of HK$2.5 billion in the first half of 2023, an increase of 0.5% over the previous year, and net profit of HK$360 million, a year-on-year decrease of 109.5%.
The company's performance declined in the first half of 2023. On the revenue side, revenue for the first half of 2023 was HK$2.5 billion, an increase of 0.5% year-on-year. On the profit side, the company's net profit for the first half of 2023 was HK$360 million, a year-on-year decrease of 109.5%. Mainly, the company focused on promoting new games in the first half of the year, paving the way for continued growth and investment.
Revenue from Evergreen games has stabilized, and revenue from the core game “Kingdom Era” is steady. In the first half of 2023, the core game “Age of Kingdoms” grossed HK$1.66 billion, a year-on-year decrease of 18%. Mainly affected by the weakening ability of overseas players to pay and the game life cycle, “Kingdom Era” will update gameplay in the second half of the year, continue to be promoted globally, acquire new users, and maintain a relatively stable monthly turnover.
The new tour showed potential and became the number of new visitors. The two SLG games “Doomsday: Last Theft” and “Viking Rise”, which the company focused on promoting in the first half of 2023, performed well. Among them, the post-apocalyptic survival-themed game “Doomsday: Last Minds” earned HK$250 million in the first half of the year, revenue exceeded HK$82 million in July, the Viking-themed strategy game “Viking Rise” had revenue of HK$120 million in the first half of the year, and the monthly turnover stabilized at HK$60 million in the first half of the year. The two new games will update new gameplay such as KVK and GVG in the second half of the year, and the turnover is expected to reach a new high.
The APP business is growing rapidly and healthily. The company actively developed tool apps and built traffic platforms. App business revenue in the first half of 2023 reached HK$190 million, an increase of 302.1 percent over the previous year. The company's platform-based business entered a period of rapid growth, with turnover exceeding HK$63 million in July. Apps contribute revenue through advertising monetization. At the same time, as the app user base continues to grow, the overlap between users and gamers will also increase. Apps have become a bridge of communication with gamers and develop collaboratively with the game business.
Profit forecasts and investment recommendations. The company's revenue for 2023-2025 is estimated to be HK$5.791 billion, HK$6.949 billion and HK$7.856 billion respectively. Revenue will continue to grow over the next three years. As a leading manufacturer of SLG games, the company's core game is developing steadily, the new game and app business are booming, and the performance growth rate can be expected. The company was given 0.8 times PS in 2024, corresponding to a target price of HK$4.64. It was covered for the first time and was given a “buy” rating.
Risk warning: Risks such as new game promotion falling short of expectations, app business development falling short of expectations, and declining players' spending power.