in Mobile Gaming

#CMGE: Major earnings beat

China Mobile Games and Entertainment Group (CMGE) announced a major earnings beat this morning. We introduced the Chinese mobile gaming developer and publisher, listed in the US, a couple of weeks ago to our readers (http://nordicinvestor.net/2014/04/04/mobile-gaming-cmge-china-place/).

CMGE’s Q1 2014 revenue reached USD 34.54m versus consensus of USD 30.23m. This marks an increase of 488% year-over-year and 47% compared with Q4 2013.

EPS reached USD 0.20 beating consensus expectation of USD 0.11 by far.

Says CMGE’s CEO Ken Xiao: “I am delighted to see our strong financial performance in the first quarter of 2014. I am also pleased with a number of recent structural developments and achievements with respect to self-developed games, game publishing, intellectual property, user acquisitions, game engine improvement and user community development. We believe that these developments and achievements will position our company for long-term growth and continued financial success.”

He continues: “During 2014, we plan to launch more than 20 self-developed mobile games, with the majority to be developed based on intellectual property that CMGE has already acquired. The first quarter of 2014 has been an intensive period of research and development for the company. CMGE currently has 17 game development workshops, located in Shenzhen, Guangzhou and Beijing, of around 500 research and development employees. Our self-developed games currently include card role-playing games, turn-based role-playing games, action role-playing games, 3D massively multiplayer online action role playing games and casual games. On March 19, 2014, CMGE launched a flight shooting game that we developed internally called Er Zhan Xiong Ying. CMCC Internet Base considers Er Zhan Xiong Ying to be a top-notch product. This game is the first shooting game launched through “Mobile Market First Launch Association” which is comprised of 20 large and popular internet platforms in China. In addition, our first multiplayer action role-playing game, Shang Gu Dou Hun conducted its closed beta testing in April 2014. We believe that this game will become a great action role-playing game. The open beta testing on this game is scheduled to take place in June 2014. Our massively multiplayer online action role playing game, War Valley 2, its predecessor, War Valley, was ranked as the number one mobile game on T-Store, which is a popular app store in Korea, in terms of downloads, for a period of time in December 2013. In addition to these games, we also plan to launch a number of additional self-developed games in the second quarter of 2014. Our existing self-developed games also continue to generate solid revenue growth. For instance, revenue from Joyful Da Ying Jia substantially increased from the fourth quarter of 2013 to the first quarter of 2014. We believe 2014 will be a strong year for the growth of our self-developed games. We aim to become one of the top five mobile game developers in China.”

By the end of Q1 2014, CMGE had expanded to 1,200 employees and game portfolio of 847 games. According to the “2014 First Quarter Mobile Game Market Analysis Report” published by Sootoo.com, during the first quarter of 2014, CMGE had the largest market share of game publishers, making up 18.9% of the total.

We continue to see CMGE as a very good opportunity to benefit from the fast growing Chinese mobile gaming market.

Nordic Investor

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