#CMGE: #iOS revenue in China +70% qoq

The worldwide app market continues to grow as Google Play revenue climbs in the United States, and China leads iOS growth” – this is the key finding of App Annie’s Q1 2014 market analysis (http://blog.appannie.com/app-annie-index-market-q1-2014/#sthash.QMDuuScf.dpuf).

Key highlights of the App Annie report are:

  • Google Play worldwide downloads now exceed iOS App Store downloads by around 45%, driven by growth in emerging markets. Russia and Brazil have been on the rise for some time now, but Mexico and Turkey also had a strong influence on Google Play downloads in Q1 2014.
  • The iOS App Store remains comfortably ahead in worldwide revenue, generating about 85% more revenue than Google Play. This gap narrowed over the last quarter though, as Google Play revenue increased markedly in the United States and United Kingdom.
  • China was the key market for iOS App Store growth, showing exceptional gains in both downloads and revenue. iOS App Store revenue in China grew around 70% quarter-over-quarter.
  • Games remained the key category driving growth in both app stores. However, there was also growth in categories outside of Games. Tools saw gains in Google Play revenue, dominated by anti-virus and security apps. On iOS, Finance grew in revenue during tax season in the United States.
  • Messaging apps remained a huge growth area, contributing to the gains for the Communication category on Google Play and Social Networking on iOS.

AppAnnie1According to App Annie Intelligence estimates, the ranking of the top five countries in the iOS App Store by both downloads and revenue remained remarkably stable in Q1 2014. However, there was still significant growth for the top countries with China making strong gains, as it has done for several quarters.

With a substantial rise in both downloads and revenue, China is now a dominant force in the worldwide growth of the iOS App Store. In January, Apple completed a deal to bring the iPhone to China Mobile, the country’s largest carrier with over 700 million subscribers. This deal reportedly drew one million new iPhone users in China in February alone. Rising demand for iPhones in China in Q4 2013 indicates that further gains may also be made for Apple outside of the China Mobile deal. During Q1 2014, downloads in China saw strong growth from apps within the Games, Travel, and Social Networking categories. Revenue growth in China was even stronger than download growth, rising by around 70% quarter-over-quarter. It was again Games that accounted for the majority of growth, with Social Networking apps also making a significant contribution.
AppAnnie2App Annie’s report is good news for mobile gaming developers in general, such as G5 Entertainment, and Chinese players in particular, such as CMGE. iOS AppStore revenue growth of 70% quarter-on-quarter in China should bode well for CMGE’s growth as well.

Nordic Investor

#Nexam Chemical: #PEPA customer in aerospace deal

NexamLogoNexam Chemical just announced that TenCate Advanced Composites and Performance Polymer Solutions (PPS) have entered into an exclusive partnership to jointly develop, market and offer high temperature prepreg materials to the aerospace industry.

PEPA is the central component in these high temperature materials and Performance Polymer Solutions Inc is today one of the customers that purchase NEXIMID 100 (PEPA) from Nexam Chemical.

The materials under TenCate’s and PPS’s partnership will be produced at the production facilities of TenCate in Morgan Hill, California, USA, and will be formulated with the line of innovative, high temperature resin systems of Performance Polymer Solutions Inc., based in Columbia Falls, Montana, USA.

Performance Polymer Solutions (P2SI®), owned by PROOF Research™, is a leading developer and supplier of high temperature resin systems for aerospace and defense use. P2SI®’s leading product, AFRPE™-4, is used by TenCate to make prepreg materials for the F-35 Joint Strike Fighter program. P2SI® is globally known as a leader in high temperature chemistry with fundamental capability in resin development technologies. In 2013, P2SI® was acquired by PROOF Research™.

Joe Morris, President of TenCate Advanced Composites in the USA states: “This is a natural partnership which allows TenCate to expand our offering of high temperature composite solutions for the aerospace, space and satellite markets, and builds upon our collaborative, multi-year relationship with P2SI®. In addition to the current F-35 platform that we support with P2SI® resin systems, we are thrilled to have the opportunity to expand the use of P2SI® resin technology into other high temperature aerospace applications.”

Pat Rainey, CEO of PROOF Research™ states: “TenCate is the ideal partner for PROOF Research™ to offer our P2SI® resins to the aerospace market. TenCate has a history of providing highly specialized, high temperature composite materials to the most demanding applications, and provides a channel to drive the use of P2SI®’s resin systems into new military, space and aero engine markets. We are excited about the opportunities that TenCate brings to the PROOF Research family.”(Source:
http://www.tencate.com/news/2014/tencate-and-proof-research-announce-exclusive-partnership-agreement.aspx).

Yet another step forward for Nexam, probably the most promising story on the Swedish stock market right now.

Nordic Investor

#G5 Entertainment: Massive #insider buying lately

newlogoSwedish mobile gaming developer and publisher G5 Entertainment has seen massive insider buying activity in recent days (http://aktietorget.se/InstrumentInsider.aspx?Language=1&InstrumentID=SE0001824004). Only in April, insiders have bought 44,000 shares. In 2014 year-to-date, that number amounts to 72,000. It is across all levels of the company, including CEO Vlad Suglobov, CFO Odd Bolin and founding members Sergey Shults and Alexander Tabunov.

This is clearly a very bullish sign and could be related to the relisting which might finally come to reality after a very long process.

Nordic Investor

#Nexam: #insider buys shares

NexamLogoNexam Chemical appears to be one of the most promising stories on the Swedish stock market right now. Only recently, it announced its first commercial orders from no less than the world’s largest chemicals giant BASF and German Armacell. With more orders around the corner, a recent successful capital injection and an upcoming relisting from First North to Nasdaq OMX Small Cap, we believe that the newsflow in the coming months will be very positive.

In this context, we find it very interesting to note that Nexam’s Chairman of the Board, Lennart Holm, seems to have increased its already large holding in the company even further at the beginning of 2014. According to data from Swedish broker Avanza (https://www.avanza.se/aktier/om-bolaget.html/409855/nexam-chemical-holding), Lennart Holm owned 5.5% of the capital on February 17th 2014, i.e. before the directed share issue in mid-March. This compares to his holding of 5.3% on December 30th 2013, according to SIS Ägarservice. This implies that Mr Holm has bought almost 100,000 additional shares in the period December 30th until February 17th.

Nordic Investor

#Invisio Communications: High #insider buying activity

invisioScreening the current newsflow on the Swedish small-cap lists, we noticed unusually high insider buying in First North listed Invisio Communication. On Wednesday April 2nd, the company announced that management bought in total 470,000 shares. Looking at the share price prior to the announcement of around SEK 8, this implies a combined value of SEK 3,800,000. That’s quite a lot of money for such a small company.

Invisios’s CEO Lars Höjgård Hansen bought 225,000 shares and owns after the transaction 410,000 shares. CFO Thomas Larsson bought 100,000 shares and owns after the transaction 135,000 shares. Furthermore, Invisio’s Heads of Sales and of R&D bought 75,000 and 70,000 shares respectively.

What’s even more remarkable is the fact that the insider purchases came after an already very strong share price run in recent months. Invisio’s share is up a cool 50% year-to-date following a stream of new orders for the company’s communication and hearing protection systems, amongst others from the US military.

It seems as if more positive news could be on the horizon for Invisio. After all, who knows better than management about ongoing negotiations and tenders made? Our guess is that the current conflict in the Ukraine will lead to increased defense spending in the coming years. Both NATO and US military have already placed initial orders and it seems likely that there is more to come.

Nordic Investor

#Mobile gaming, #CMGE: China the place to be

China has experienced, and is expected to continue to experience, solid growth in the mobile game market. According to research firm Analysys (http://english.analysys.com.cn/), the total market size of mobile games in China reached RMB12.1 billion in 2013, representing a CAGR of 54.3% from RMB3.3 billion in 2010, and is expected to grow at a CAGR of 52.3% from 2013 to 2016 to reach RMB42.7 billion in 2016. Key growth drivers for the mobile game industry in China include:

  • Sustained economic growth and increasing disposable income. China has experienced significant economic growth over the last decade. As a result of large-scale urbanization, per capita disposable income of urban households has grown from RMB17,175 in 2009 to RMB26,955 in 2013, according to the National Bureau of Statistics of China.
  • Increasing mobile internet, smartphone and tablet penetration. As it becomes more affordable and easier to access the internet via mobile devices, the universe of internet users is undergoing a migration from traditional desktop personal computers to mobile internet. Driven by increasing affordability and improved functionality of smartphones, according to Analysys, the number of smartphone users has reached approximately 480 million in 2013, and is expected to grow to approximately 800 million in 2016. In addition, as tablet devices continue to develop and offer more comprehensive functionalities similar to those of personal computers, an increasing population of internet users is expected to use tablets instead of personal computers at home for both entertainment and business purposes, leading to an increase in time spent on mobile devices. According to Analysys, the number of tablet users has reached approximately 57 million in 2013, and is expected to grow to approximately 203 million in 2016.
  • Maturity of payment channels. Payment for mobile games and other value-added services in China have become more transparent, reliable and widely-accepted. Players have a variety of payment options for mobile value-added services, including through mobile network operation channels and payment channels such as Alipay, Unionpay, as well as bank cards and prepaid cards.
  • Increased accessibility of data network connections. The continuous development of the data network infrastructure and reduced data streaming fees have enabled fast, easy and affordable mobile access to the internet through data network connections including 3G and Wifi networks. The emergence of 4G LTE networks is expected to further enhance connectivity for mobile devices in China. Moreover, as fast and easy access to mobile internet becomes available, the social network effect of mobile internet will continue to drive user engagement on mobile devices through social networks, social mobile games and other social functionalities on mobile devices.

AppstabletOne of the main players in the Chinese mobile gaming market is a company called China Mobile Games and Entertainment Group (CMGE), which is listed in the US on Nasdaq under the ticker CMGE. The company has integrated capabilities across the mobile game value chain. Based on grossing billings, CMGE has the largest market share of all mobile game publishers in China in 2013 according to a February 2014 report published by Analysys. CMGE’s market share reached 17.9% of gross billings generated by all mobile game publishers in China in 2013, according to Analysys. The integrated capabilities include the development, licensing, publishing, distribution and operation of mobile games, primarily in China. For the year ended December 31, 2013, CMGE had 27.5 million paying users (as measured by the total number of paying user accounts and total subscriptions for game bundles), including 7.7 million paying users of social games. As of December 31, 2013, CMGE had more than 500 research and game development employees and the company plans to continue to expand its team.

CMGE has a large portfolio of popular and high-grossing games, as measured by downloads and revenues. As of December 31, 2013, the game portfolio included 72 social games and 645 single-player games. In addition to existing games, the company has a strong pipeline of games with a variety of themes, cultural characteristics and features designed to appeal to a broad base of players. In 2014, CMGE plans to launch 50 social games and 32 single-player games.

What is special with CMGE, in our opinion, is that they have established a multifaceted publishing platform. They cooperate with numerous business partners, including chipset manufacturers, handset companies, app stores, web platforms, advertisers and mobile network operators. This multifaceted publishing platform makes them an attractive partner for game developers who seek to publish their games across multiple distribution channels and has allowed them to license a number of successful games from a broad base of mobile game developers. Notably, CMGE publihses Gameloft’s Minion Rush and Glu Mobile’s Eternity Warrior 3 in China. CMGE has been recognized as “The Most Powerful Publisher” by Shan g Fang Wang (sfw.cn), a leading industry website, and as a “Top 10 Publisher” by You Xi Duo (youxiduo.com).

A key differentiation factor, we believe, is CMGE’s own Game Center Application through which the company publishes its  self-developed and licensed games. The Game Center application is its proprietary application for Android-based smartphones and pre-installed on millions of handsets throughout China. Through its Game Center, players can download over 1,000 games, both those that CMGE owns and licenses and those that are owned and licensed by third parties. CMGE developed the Game Center application internally and owns all of the intellectual property rights to the Game Center application.

Additionally, CMGE works with chipset manufacturers to pre-install the  Game Center application and mobile games on handsets. For example, Mediatek, the largest integrated circuit design company in Asia and one of the ten largest integrated circuit design companies in the world, pre-installs CMGE’s Game Center application on its chipsets. CMGE also enters into agreements with handset companies to preserve its games on the handsets that have its pre-installed chips so that its games can remain available to end-users.

CMGE has entered into direct contractual relationships with many handset manufacturers and design houses. They generally pay handset companies with which they have direct contractual relationships a certain percentage of the proceeds received from mobile network operators or the service providers. The agreements with these handset companies generally have a term ranging from one to three years and may be renewed at the parties’ mutual agreement or automatically renew for one year absent any prior notice of termination.

Naturally, CMGE’s games are also distributed through a number of app stores, web platforms and social networks, including Apple’s App Store, 91.com, Baidu, HiMarket, Qihoo 360, Google Play, d.cn, China Mobile’s app store, Sina Weibo mobile portal and UCWEB.

Last but not least, CMGE has developed strong relationships with mobile network operators, including China Mobile and China Telecom. Pursuant to these relationships CMGE shares revenue generated by the games hosted on their network and platforms. CMGE has a channel cooperation agreement with China Mobile, the largest mobile network operator in China. Pursuant to the agreement, China Mobile promotes and distributes CMGE games to players on its mobile game platform, and CMGE receives technical support, customer support and user data from China Mobile.

As mentioned above, CMGE’s games include social games as well as single-player games which are available both individually and as part of game bundles. The following table shows CMGE’s game portfolio growth over recent years:

CMGE games

In addition to developing new games CMGE is also working on several new technological innovations. For example, the company is currently beta-testing a new website, 51PK.com, that will allow players of combat games to interact using different devices, such as smartphones, tablet computers and smart TVs. This website will create a virtual “hang-out” feature patterned after traditional game arcades where players can converse and compete. In connection with this website, CMGE is developing a solution to the traditional lag time for social games in China. Because of endemic network problems in China, there is typically a delay for social games. While this does not seriously impact card and certain other social games, it severely dampens player enjoyment of social combat games in China. CMGE is developing a proprietary technical solution to this problem that could potentially allow them to fulfill significant unmet market demand for these types of games that require real-time interaction among players and help them to attract new developers to our platform.

CMGE’s success is slowly but steadily also recognised by the bigger investment banks, only yesterday Barclays initiated coverage of CMGE with an Overweight rating and a 12-month price target of USD 32. This compares to yesterday’s closing price of around USD 22.

Barclays focuses in its initiation report on CMGE’s: 1) leading position in integrated mobile games publishing and development; 2) extensive and diversified games portfolio; and 3) multifaceted publishing channels/platforms. Barclays expects potential share price catalysts from: 1) overseas expansion initiatives; 2) the traction and revenue opportunity from 51PK.com; and 3) the rising penetration of its Game Center app via MediaTek’s handsets. Barclay’s USD 32 price target is based on 15x our 2015E non-GAAP EPADS of USD 2.13, implying a PEG ratio of 0.19x, which they believe is reasonable considering the hit-or-miss nature of new games’ success, the shorter life cycle of mobile games, and potential execution risks.

Elsewhere, we note that US investment bank Brean Capital currently has a target price USD 45.

Nordic Investor

 

 

#Opus: Clear ambition to grow

logoOpus recently participated in an Investor Forum in Gothenburg, Sweden (18/03/2014).

Besides a general presentation of the company and an update of the recently closed Envirotest acquisition, we believe one of the most interesting comments was made during the Q&A session at the end. Asked about the likely upcoming newsflow for 2014, Opus’ Head of Investor Relations, Peter Stenström, stated that the company has the clear ambition to grow. There are 3-4 new contracts to be distributed in the US and also South America is considered to be very interesting region for Opus. Mr Stenström also mentions Asia as a promising region going forward. In terms of M&A, 2014 should be seen as a year of consolidation following the large acquisition of Envirotest.

You can see the presentation here:

https://redeye.solidtango.com/widgets/embed/n49v8w7f?auto_play=true&seek=0

Nordic Investor

#G5 Entertainment: Strong Q1 prel numbers

newlogoAs indicated by our most recent ranking check, G5 Entertainment has managed to record a new record quarter. This morning the  company announced preliminary Q1 2014 revenues of SEK 40m,  which corresponds to achieving 45% revenue growth compared to the same period of 2013. Management reiterates that it expects a profitable and cash flow positive first quarter.

G5 Entertainment – 12m trailing revenues:

G512msalesRegarding its development office in Kharkov, Ukraine, G5 states that business continues as usual and has not been affected by recent events. As communicated in Q4 2013 report, G5 holds intellectual property rights and backs up critical code and materials outside of Ukraine, and only transfers funds to subsidiaries in Ukraine and elsewhere on an as-needed basis.

The group’s interim report for the period January-March 2014 is going to be released on 15th May 2014.

We find it very impressive that revenues apparently continued to be well above SEK 10m in March. Historically, the strong start of the year has been followed by a period of declining revenues. The increased focus on F2P games seems to secure a more steady sales development.

Today’s number should serve as both a relief and a reminder to investors as to how scalable and promising the mobile gaming market is.

Nordic Investor

#King.com: Shares drop first day of trading

KingLogoMobile game maker King Digital Entertainment gets a cold welcome on its first day of trading on the New York Stock Exchange today. Its shares are currently down some 10%.

King.com priced its initial public offering on Tuesday at the mid-point of its expected range, valuing the “Candy Crush Saga” maker at about $7.1 billion despite questions about whether it can replicate the success of its smartphone smash-hit.

The offering marks the largest United States IPO from a booming mobile gaming industry that has been keen to emerge from the shadow of Zynga Inc, the social gaming firm that lost half its value after a 2011 IPO that valued it just below King at $7 billion.

London-based King priced its IPO at $22.50 per share, with the stock to debut on the New York Stock Exchange on Wednesday. Its offering of 22.2 million shares would raise about $500 million at that price.

“It’s fair to say that if it was a very high-demand IPO, we would’ve seen the price at the upper end of the range,” Sterne Agee analyst Arvind Bhatia said. “At the mid-point, it’s a successful IPO but perhaps not a runaway success.”

Even if King, whose other games include “Bubble Witch Saga” and “Papa Pear Saga”, pulls off a strong debut, the real test will be the stock’s staying power in coming weeks and months. King hopes to avoid Zynga’s fate by virtue of a stronger focus on a mobile gaming market worth an estimated $17 billion.

“What’s more important than the price is how it trades tomorrow and in coming sessions,” Bhatia said. “If the investors are in because they expect a quick profit and it doesn’t happen because it doesn’t get a lift, people will exit quickly.”

Founded in Sweden in 2003, the company has drawn plaudits for transforming “Candy Crush Saga” into a household name that was the most downloaded and top-grossing free app of 2013 on Apple Inc’s app store.

 Nordic Investor

 

 

 

 

#TrustBuddy: Upbeat CEO in annual report

A few days ago, P2P lending company TrustBuddy published its annual report for 2013. Here are some of the highlights:

In his address to the shareholders, CEO Jens Glaso says: “TrustBuddy has established itself as the biggest P2P lender in the world for small-sized loans. 2013 has been a very exciting and interesting year in which we rapidly expanded our market, developed our platform and enhanced our organisation.

The lack of lending capital was during the end of H2 a challenge for the company. Despite that fact, we managed to deliver an increase of 115% in loan volumes for the full year, which we consider to be very good given the circumstances.

We anticipated the lack of capital and have worked with big focus on finding strong institutional investors in order to ensure continued powerful expansion both on existing and new markets. Through a multi-layered transaction in December, we secured SEK 180m for the company divided between equity and loan capital and we managed to get the institutional ownership that we had hoped for.

We take the big institutional interest that we are now experiencing as a good sign that 2014 will become a milestone and turning point both for TrustBuddy and the other international P2P-players. As a consequence of the capital increase we are now better equipped than ever both organizationally and financially. We have improved our capability, competence and processes and have all the tools needed to capitalize on the continuing increase in demand.

TrustBuddy’s focus on P2P lending with high margins and with the unique inhouse-developed IT platform has contributed to the fact that the company has established itself as a global leader in the segment. With a yield which is 3 times the average for the segment and the driving force to increased loan volumes provided by the new capital, we are estimating that the company’s revenues will double during 2014.”

Commenting on the market for short-term loans, TrustBuddy states in its annual report that despite the strong growth in recent years, it does not see any signs of saturation neither in the Nordics nor in Europe. There is still room for continuous growth within existing offerings and via new product- and service offerings.

TrustBuddy does not see any direct competition within the short-term loan niche, that is acting based on a comparable IT-based P2P-platform.

Already in connection with its Q4 2013 report, TrustBuddy stated that it expects 2014 to be the sixth consecutive year of strong growth for the Company. This is already evident from the recently reported growth in loan volumes in January 2014; which came in 25% ahead of the previous month.  The company expects the growth to benefit from the investments made into the new and highly efficient P2P-platform and systems in 2013, which will enable roll-outs of improvements in convenience for users, further European penetration and facilitate ongoing and future product development.

Furthermore, TrustBuddy anticipates that significant institutional capital will be deployed on the platform in the 2nd Quarter of 2014, which will drive material volume growth.  TrustBuddy expects full year 2014 lending volume to reach the amount of SEK 1,5 Billion. The lending volume is expected to increase exponentially through the year with the largest part during 2H 2014.

Nordic Investor

Investments up North

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