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#CMGE: Strong Q2 results; #insider purchases

CMGElogoChina Mobile Gaming and Entertainment Group (CMGE) just announced a great set of Q2 2014 results. Revenues were RMB274.6 million (US$44.3 million), compared with RMB72.0 million in the second quarter of 2013 and RMB214.7 million in the first quarter of 2014. Revenues were 281.4% higher year-over-year and 27.9% higher quarter-over-quarter.

Net income was RMB54.9 million (US$8.8 million), compared with net loss of RMB12.6 million in the second quarter of 2013 and net income of RMB34.7 million in the first quarter of 2014. Net income was RMB67.5 million higher year-over-year and 58.2% higher quarter-over-quarter.

According to the 2014 First Quarter Mobile Game Market Analysis Report published by Analysys International, CMGE again ranks first among China’s mobile game publishers with 18.1% of market share in China (in terms of gross billings). In conclusion, during the second quarter of 2014, CMGE has seen positive growth with its self-developed games as well as publishing business. The company states that it believes that its self-developing business growth will continue in the second half of 2014 and its publishing business will also record solid growth.

Mr. Ken Chang, CMGE’s chief financial officer, says in the report: ” I am pleased with our second quarter financial performance: revenues increased by 27.9% and net profit increased by 58.2% quarter-over-quarter. During the quarter, our self-developed games as well as our publishing distribution platform continued to deliver strong growth. Our operating data for both social games and single-player games recorded impressive growth. Paying users for social games and single-player games increased by 38.9% and 5.7%, respectively, compared to the prior quarter. Our net margin improved to 20.0%, up from 16.1% in the prior quarter. Our operating expenses as a percentage of revenues were comparable to the prior quarter. In addition, we continued to expand our top line while conducting prudent cost control management.”

In June 2014, CMGE’s CEO led an organizational restructuring of its game publishing business. The restructuring included personnel changes, relocation of employees and reassignment of managerial roles in the game publishing business. The primary purpose of the restructuring was to streamline the Company’s operations, increase efficiencies and better position the Company for profitable long-term growth. The reorganization has been successfully completed.

Encouragingly, CMGE also announced today that it has been informed that Mr. Ying and Mr. Ken Jian Xiao, the company’s CEO and Director, intend to individually purchase RMB10 million each of the Company’s American Depositary Shares (“ADSs”). The Company has been informed that the repurchases will be made in the open market at prevailing market prices or through privately negotiated transactions. The timing and extent of any purchases will be determined by Mr. Ying and Mr. Xiao and may depend upon market conditions, the trading price of ADS and other factors. Mr. Xiao and Mr. Ying have informed the Company that the share repurchases will be completed within two months of this press release and will be financed with their own personal funds. CEO Mr. Xiao commented: “Management share purchases reflect the confidence that we have in CMGE’s future and our ability to drive long-term growth.”

CMGEGiven the fact that the CMGE has been beaten down substantially since June this year, we believe there should be ample room for share price recovery in light of the positive news today.

Nordic Investor

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  1. Joe August 20, 2014 Reply

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