FAST NEWS: CMGE returns to profits as game approvals resume

The latest: Game operator CMGE Technology Group Ltd. (0302.HK) said Thursday it expects to post a non-GAAP adjusted net profit of 65 million yuan (8.93$ million) or more for the first half of this year, reversing an adjusted net loss of 15.7 million yuan in the same period last year.

Looking up: The company returned to profitability on a post-Covid recovery for China’s gaming market, and after the regulator resumed issuing licenses for new games after a months-long pause.

Take Note: Part of the company’s first-half profits came from fair value gains on investments, which are unrelated to operations.

Digging Deeper: Founded in 2009, CMGE is a global game operator that listed in Hong Kong in 2019. The company’s revenue has risen steadily since its IPO and reached record highs for three consecutive years through 2021. But the figure plunged more than 30% last year, leading the company to post a 205 million yuan net loss for 2022. Driving the loss was a 63.8% increase in administrative expenses, a decline in gross billings for some games, as well as the impact of the pandemic and a regulatory pause in approving licenses for new games.

Market Reaction: CMGE shares edged up on Friday morning, but later gave back the gains and closed down 0.6% at HK$1.61. The stock now trades near the lower end of its 52-week range.

Translation by A. Au

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