On the morning of August 23, Qingci Games (6633.HK) held its 2024 mid-year performance conference. As a leading boutique mobile game developer and publisher, Qingci Games has been committed to providing unparalleled experiences to game players around the world through its iconic and captivating games and content.

From the 2024 mid-year performance released this time, it can be seen that Qingci Games, by continuously consolidating its core competitiveness of research and operation integration, has achieved outstanding performance in its multiple games in the overseas market, with a strong year-on-year revenue growth of 120% in the first half of the year, fully demonstrating the effective global layout of the company and entering a period of harvest.

In addition, the company is also focused on developing and publishing boutique projects, with a rich reserve of games, and plans to further expand its overseas market in the future to further open up growth space.

The following are the specific highlights of Qingci Games' latest performance:

Strong year-on-year increase of 120% in overseas revenue, and double increase in revenue and net profit attributed to the mother

Financial report data shows that Qingci Games has achieved stable and excellent operating performance in the first half of the year, with operating revenue of 0.343 billion yuan, a year-on-year increase of about 3%; a profit of 38.2 million yuan; and a net profit attributed to the mother of 45.059 million yuan, a year-on-year increase of 8.62%. These core financial indicators undoubtedly demonstrate the company's stable profitability and excellent financial condition, laying a solid foundation for the company's future development.

On the user side, Qingci Games' performance is equally impressive. In the first half of the year, the cumulative number of registered players reached 93.39 million, an increase of 13% compared to the same period last year, showing strong user attraction. The monthly average number of active users is approximately 2.1789 million, a year-on-year increase of 21.22%, and the user activity has significantly improved. The monthly average number of paying users has remained stable at 0.2528 million, with an ARPPU (average revenue per paying user) exceeding 275 yuan, maintaining a high level of paying user quality and ability.

From the perspective of revenue distribution, Qingci Games' overseas layout has achieved remarkable results. In the first half of the year, the company's overseas revenue increased from approximately 65 million yuan in the same period last year to approximately 0.143 billion yuan, a year-on-year increase of 120%. The proportion of overseas revenue also increased from 19.4% in the same period last year to 41.7%, indicating the significant effectiveness of the company's global layout strategy.

Further analysis shows that the significant growth of Qingci Games' overseas revenue is mainly due to the successful launch of multiple games in different regions around the world. For example, in February 2024, the casual game 'Fat Goose Fitness Center', released in Japan, ranked first on both the iOS and GooglePlay free games charts, demonstrating its strong market appeal. In addition, the game 'Strongest Snail' has also been launched in Vietnam and multiple European countries, ranking first on the iOS free games chart in Vietnam, and will be launched in South Korea in the future, further expanding the company's overseas market coverage.

It is worth noting that Qingci Games' long-term operational capabilities are equally outstanding. Multiple games have performed well after launch, such as the flagship original game 'Strongest Snail', which celebrated its fourth anniversary in Mainland China and second anniversary in Japan, and its first anniversary in North America. As of the first half of the year, the game has accumulated a total revenue of approximately 3.46 billion yuan domestically and internationally. In addition, 'Lantern and Dungeon' has continued to contribute stable income to the company after major version updates, with an accumulated revenue of approximately 0.317 billion yuan in the first half of the year. Other major games have also performed well, jointly driving the steady development of Qingci Games.

With a rich product matrix and abundant game reserves, there is further room for expansion.

In the first half of the year, the company has successfully accumulated 14.9728 million loyal Qingci fans, achieving a significant growth of 25.24% compared to the same period last year. Through interactions on the company's official accounts and popular social media platforms such as Tencent QQ, WeChat, and Bilibili, a positive and effective user interaction ecosystem has been established.

Looking ahead, the company's management has stated that it will further enrich the game product matrix and accelerate the testing and launch of game reserves in domestic and international markets. It can be seen that this will help the company tap into a broader market space and bring more growth momentum.

For example, in August 2024, the company successfully launched 'Ares Virus 2', which has received widespread praise and recognition from players for its unique art style, rich scenes and character designs, as well as its challenging and fun decryption gameplay. In addition, the company has introduced two new games with unique charm and potential, including the 2D semi-turn-based card game 'Project W' adapted from the novel 'The Great Ruler' by the well-known writer Tiancan Potato, and the card RPG game 'Project HA'.

In the overseas market, the company has also made significant progress, such as the upcoming launch of 'BloodAge' in South Korea, marking the company's official entry into the Korean gaming market. The company's self-developed game 'Project E' is expected to further expand its testing scale in the second half of the year, and the development of other reserve games is also in good condition.

The company emphasizes that it will continue to promote the release plan for reserve games, actively seek high-quality game projects, and strive to build a diversified game portfolio to provide excellent gaming experiences for global players. This will further expand the future market's growth space and establish a solid foundation for future development.

The following is a partial record of the Q&A session between investors and management at this earnings conference:

Q1: In the first half of the year, the company's overseas revenue saw a significant increase. How do you foresee the focus products overseas in the second half of the year and the future development of overseas business?

A1: In the first half of the year, the company steadily progressed in overseas operations with a significant increase in revenue. In the second half of the year, the company plans to launch a Western fantasy-themed RPG card game called 'BloodAge' in South Korea, which has performed well after its release in Europe and the US. 'Strongest Snail' will also be launched in the Korean region.

In the future, the company is prepared to continue steadily expanding its overseas presence to further increase the proportion of overseas revenue.

Q2: How is the progress of the company's key game reserve project, self-developed product 'Project E' currently? When is the expected launch?

A2: 'Project E' is the company's most core product, led by the company's chairman personally with a team of nearly 150 people for research and development, it has already entered the stage of version iteration. The company plans to further expand the scale and scope of testing in the second half of this year. 'Project E' has brought together the company's most core research and development resources and development capabilities, aiming to create a product that will amaze both the industry and players.

Q3: What experiences can the company share about the lightweight game publishing in overseas markets?

A3: In terms of lightweight game publishing overseas, taking 'Fat Goose Gym' as an example, precise localization is crucial. For example, when launching in Japan, creating an image of the diligent gym-going fat goose character through advertising materials, filming advertisements with live actors, and engaging with groups highly aligned with the target user profile, enhancing community operations. At the same time, developing distribution strategies based on the activity level of local social media, such as conducting pre-launch activities in active Japanese communities, strengthening character image, encouraging players to create fan content and promote fans.

Q4: What is the overall structure of the internal R&D and publishing teams of the company? What is the team size on key projects?

A4: The company's internal R&D team has about 400 people, and the publishing team has about 200 people. The core team is focused on key projects, such as the 'Project E' team with nearly 150 people. In addition, the 'Strongest Snail' project group is also relatively large, responsible for operations in domestic and global regions. The company has also optimized some underperforming teams, concentrating R&D efforts on the most core projects.

Q5: In the first half of the year, the company's investment fair value has changed a lot, how to look forward to the sustainability of the follow-up?

A5: The company's fair value changes mainly come from the investment in short-term money market funds and financial products. The company uses strong cash reserves for financial management and investment, showing overall stability. There is not expected to be much change in the second half of the year, but attention should be paid to the impact of fluctuations in the Japanese yen exchange rate on investments. The company will continue to focus on steady investment.

Q6: What is the company's subsequent layout and strategy for mini-game development?

A6: Mini-games are a growing track, but the mini-game market has also undergone changes, with lightweight games shifting towards boutique and heavyweight. Although the company continues to pay attention to mini-games, it sees them as a supplement rather than a focus layout. Several mini-games are already online, and high-quality products will continue to be selected for cooperative publishing.

Q7: What are the company's current ideation approach and main assessment points?

A7: The company is currently concentrating high-quality resources on the most core projects and has strict standards for new projects. First, the core production team needs sufficient confidence and a core idea for the project; secondly, there needs to be a detailed project plan, including a stable model, expected profit growth points, etc. The focus is on projects that combine creation and profitability, ensuring that projects are not at a loss while encouraging creativity and innovation.