jokerpokervideopoker| As the market recovers, the opportunities for China Mobile Games (0302.HK) to "ensure compliance" outweigh the risks

Benefit from the positive factors such as the regular release of game version numbers and the application of AI technology in game development.JokerpokervideopokerThe performance of major game companies has picked up rapidly, market sentiment has been boosted, and the game sector is showing signs of recovery in the capital market.

Huachuang Securities pointed out that the valuation of the game sector has returned to a lower level after previous adjustment, and it is suggested that we should pay attention to the rising potential of the prosperity of the industry in the medium term, and pay attention to the practical application and landing of scientific and technological innovation in the game field for a long time.

In particular, compared with the A-share game sector, the adjustment of the Hong Kong stock game sector is more significant, which may provide some noteworthy opportunities for participants seeking value investment.

Hong Kong Stock Connect, as an important bridge between mainland investors and Hong Kong stock market, the changes in its list can always cause widespread concern among investors. Note that recently, the market for the head of the game whether mobile games can continue to stay in Hong Kong Stock Exchange, there are some discussions and voices.

Might as well start from the recent mobile games, to talk about some of the author's views on this matter.

1. What are the conditions for Baotong?

First of all, it needs to be clear that the adjustment of the constituent stocks of Hong Kong Stock Connect involves the adjustment of the Hang Seng Composite Index, which is the main basis for determining the investment scope of Hong Kong Stock Connect. In other words, Hong Kong listed companies must first become constituent stocks of the Hang Seng Composite Index before they can be on the Hong Kong Stock Connect list.

First of all, the rule of excluding constituent stocks in the Hang Seng Composite Index points out that according to the average monthly market capitalization of the last 12 months, existing stocks with a cumulative market capitalization coverage of 96% are excluded from the Hang Seng Composite Index, and existing constituent stocks less than 96% will be retained.

Secondly, the Shenzhen Stock Exchange Shenzhen-Hong Kong Stock Connect Business implementation measures clearly define the adjustment standards of Hong Kong Stock Connect stocks. Hong Kong Stock Connect stocks that belong to the Hang Seng Composite small share Index and do not belong to A + H shares shall be transferred out of Hong Kong Stock Connect stocks if the average market capitalization of Hong Kong stocks at the end of the month is less than HK $4 billion 12 months before the adjustment.

This means that middle-hand games must meet two criteria before the next regular review of the Hang Seng Composite Index and the Hong Kong Stock Connect (June 30). That is, (1) the first 96% of the cumulative market capitalization coverage; (2) the average market capitalization at the end of the 12 months before the adjustment inspection is more than HK $4 billion in order to successfully "Baotong".

According to LiveReport data, the current market coverage rate of mid-hand games in Hong Kong is about 96.15%, which just meets the market coverage requirements of the Hang Seng Composite Index. In terms of market capitalization, Futuo Niuniu data show that the market value of middle-hand games is about HK $3.468 billion, which is only one step away from HK $4 billion, and it is relatively easy to reach this threshold.

2. Buyback to increase holdings, new directors to move in, "real money and silver" to show confidence

Further, the author believes that the recent mobile games, whether it is the company buyback, the increase of senior executives, or the arrival of new directors, all show the confidence of the company's management and shareholders in its value growth.

On the one hand, on March 28, Zhongshou announced that it would use a maximum of HK $100 million to repurchase shares in the open market with the share Repurchase Authorization, and has started and continued to buy back shares. And again issued a notice on April 23, announcing that the purchase would not exceed 10% of the total number of shares issued by the Japanese company when the share Repurchase Authorization was approved, that is, a maximum of 2.Jokerpokervideopoker752672000 shares, about HK $325 million at current prices

It is worth noting that the repurchase strategy of mid-hand games is not a blind pursuit of large-scale capital investment, but a prudent decision made after comprehensively considering the rational allocation of funds and complying with the regulations of the Hong Kong Stock Exchange. First, retain sufficient funds to support game research and development and new projects online, which is the key to the company's long-term growth and competitiveness. Second, follow the rules of the HKEx to ensure that the repurchase price is not higher than 5 per cent of the average price over the past five trading days.

Considering the repurchase plan and market performance of middle-hand games, it can be judged that the repurchase actions of middle-hand games will continue or contribute to the improvement of stock price performance.

Source: company announcement

At the same time, Xiao Jian, chairman and CEO of Mid-hand Tour, has continued to increase his holdings since April 24. By the close of trading on April 26, Xiao Jian had increased his holdings three times involving a total of HK $1.4749 million, with the latest number of shares holding 785 million shares, with the proportion of holdings rising from 28.50% to 28.51%. It is reported that in the same period last year, Xiao Jian also continuously increased his holdings of medium-hand games for nearly 20 times, totaling about 14.236 million shares.

Data source: easy disclosure

In short, whether it is buyback or increasing holdings, it can enhance investors' confidence in the future development of the company in the context of the current market volatility, and effectively prevent the stock price from being too low and deviate from the actual value, and protect the rights and interests of shareholders.

On the other hand, on April 22, Zhongshou issued a notice announcing that Guangdong Pearl River Investment Management Group Co., Ltd. (hereinafter referred to as "Pearl River Investment Management") was stationed in Jiang Yukai to join the company's board of directors as a non-executive director. After joining, the board of directors of Mid-hand Games is composed of 8 members.

In the author's opinion, the addition of Jiang Yukai is not accidental. Zhu Yihang, the real controller of the Pearl River Investment Control, as the eldest son of the Zhu Mengyi family, has been expanding in the field of e-sports in recent years, covering not only e-sports education and e-sports theme industrial park, but also diversified businesses such as MCN institutions and animation IP pan-entertainment plate.

As early as 2021, Zhu Yihang subscribed for 56.4 million shares of mobile games through his investment company Wide Fortune. The appointment of Jiang Yukai as a non-executive director can be said to be an important strategic move for Zhu Yihang to deepen his investment layout in games and IP business through middle-hand games, and also provides imagination for him to further increase his stake in mid-hand games in the future.

On April 28, Mid-hand Games announced that it had reached a strategic cooperation with Zhu Yihang's Chao Jing Group. Among them, Chaojing Group or its related parties intend to subscribe or purchase shares in mid-hand games, and Zhongyou also intends to cooperate with EDG e-sports clubs and MCN institutions of Chaojing Group at the equity level to further strengthen the strategic cooperative relationship between the two sides.

In addition, with regard to its EDG e-sports club, MCN institutional talent resources, business matrix and capital strength, Chaojing Group plans to carry out multi-level and comprehensive cooperation with middle-hand games in game product development, game operation and promotion, game e-sports, IP commercialization and other aspects. Achieve resource sharing, mutual benefit and win-win results, and establish a stable and sustainable strategic partnership.

Therefore, the addition of Jiang Yukai as a new director may indicate that there may be more opportunities for strategic cooperation and resource sharing between Zhu Yihang and the middle-hand tour in the future. Zhu Yihang's extensive investment in e-sports and pan-entertainment will contribute to the business development and resource integration of mid-mobile games in these areas.

For example, the announcement mentioned the use of Super Competition Group's MCN institutions and media resources to promote middle-hand games, and to establish exclusive KOL and KOC social media matrices to improve the conversion efficiency of the company's game promotion; both sides carry out international physical card business based on "Chinese Paladin" IP, pushing China's local IP to the global market Middle-hand games will work with EDG e-sports club to build e-sports ecosystem and develop global game products with e-sports attributes; through the establishment of a new game experience research institute, with the participation and support of more excellent e-sports players and anchors, to provide professional feedback and suggestions for middle-hand games in research. The emergence of these substantive cooperation has also directly hit the "bull's-eye" to rapidly enhance the core competitiveness of both sides.

At the same time, developing "Chinese Paladin" IP derivatives and offline business cooperation with his family's Hesheng Commercial Group may create a "spark" in the future, resulting in new business models and growth points.

The positive feedback from the capital market reflects the market's confidence in the future growth of the value of Chinese mobile games. After the announcement that Jiang Yukai joined the middle-hand game as a new director, the company's share price continued to rise for two consecutive trading days, with a cumulative increase of 20%.

3. "Xianjian World" will be launched to enrich the reserves and lay the foundation for growth.

Of course, as an investor, to judge the long-term value of mobile games, we will eventually return to the fundamental analysis.

The intensive launch of heavy new games and rich reserves of new games during the year will not only give a strong impetus to the performance growth of middle-hand games, but also lay a solid foundation for its sustained growth with diversified sources of income.

It is reported that Zhongyou based on Xianjian IP blockbuster product "Xianjian World" has announced three tests of "Feng Qi" test schedule on May 31st. As the country's first multi-end test of the Guofeng Xianxia open world game, "Xianjian World" has already attracted the attention of countless players. This test is the first paid deletion test of the game, and supports the interconnection of PC, Android and iOS, which is expected to bring considerable revenue to middle-hand games.

Source: company information

The three tests, mobile games once again around the content, visual effects, game mechanism, play, roles and other aspects of the omni-directional optimization and upgrading.

For example, the game will fully present the first large area in "Xianjian World"-"Jiangnan"; visually, the game will integrate the classic "three Emperors and Wuling" world outlook of Xianjian IP, bringing players a more immersive experience; in terms of game mechanism, the brand-new "Imperial Spirit" system provides multiple interaction and exploration. In terms of characters, the game will add new operable original characters "Yi Shu" and "Yunruicao" to further enrich the character lineup and storyline of the game.

In addition, middle-hand games are also expected to launch a number of blockbuster IP games in 2024, such as "fighting the mainland: reversing time and space", "fighting against the Sky: the Peak duel", "Naruto: Muye Master", "biographies of the New three Kingdoms Cao Cao", "Daily Life of chat groups" and so on, many of which have completed tests and opened appointments. The launch of the "Xianjian World" in the superimposed year is expected to bring good performance contribution to the growth of middle-hand games this year.

In this regard, major brokerage institutions also give positive expectations for the future growth of mid-mobile games. For example, China Bank International maintains a "buy" rating for mid-hand games, with a target price of HK $2.90, and forecasts that its revenue will grow by 32% in fiscal year 2024, with an adjusted net profit of 387 million yuan.

4. Conclusion

Generally speaking, in the current market environment, middle-hand games have shown a positive trend and strong growth potential from both the fundamental and capital levels. On the one hand, the launch of blockbuster new games such as "Xianjian World" will further promote the company's performance growth. On the other hand, the buyback and the addition of new directors provide confidence support for investors.

The Hong Kong stock market has also picked up recently, April 26 is also the first intraday attack on the position of the bull-bear line since August last year, the follow-up is expected to stand firm on the bull-bear line to continue to rise, the capital side is also ushered in a large return in the near future. Tencent, the leading target of Hong Kong stocks, was also the first to break the annual line last week, with a weekly increase of 14.68%.

Based on a variety of positive factors, the author believes that middle-hand games should get the premium brought by stronger performance, as well as the valuation repair brought about by the subsequent recovery of market liquidity, and have a more optimistic attitude towards its next "Baotong war".