On September 14, CMB International Securities Limited released a research report on CMGE (00302.HK). The report predicted that, with rich IP reserves and multiple release channel, CMGE would achieve stable growth for long and CMB International would maintain the buying rating and target price of 4.39 Hong Kong dollars.

According to the report, measured by the target price of 4.39 Hong Kong dollars, the average P/E ratio of CMGE in 2020 would be 11.4 times, still lower than the industrial average P/E ratio of 15 times but with more potential. There are two factors that will bring positive price drivers and promotion to the stock price of CMGE: the game of Monster List: Past and Present to be launched in September and two important IP-based games exclusively distributed by Toutiao in the fourth quarter of 2020。

It is predicted in the report that the revenue of CMGE in FYs 2020, 2021 and 2022 will reach CNY 4.37 billion, CNY 5.192 billion and CNY 5.938 billion, with year-on-year increases of 44%, 19% and 14% respectively. In the meantime, the net profit in those years will reach CNY 802 million, CNY 960 million and CNY 1.091 billion, with year-on-year increases of 31%, 20% and 14%. The report also pointed out that, benefiting from the steady revenue from long-term products and outstanding performance of new games including Xuan Yuan Sword - Origin of the Sword, CMGE has achieved stable growth in the first half of 2020 and will continue to maintain such achievement in the second half. It is predicted that the revenue and net profit in the second half of 2020 will increase by 28% and 31% year-on-year respectively and the games co-developed with Tencent and Toutiao are highly anticipated.

The report was optimistic about the development of CMGE in the second half of 2020 and indicated that three major IP-based games are prepared for launch. Among games that have already been launched, the popular IP-based game Condor Heroes Trio launched on August 20 enjoyed the 8th place in the total revenue ranking of iOS, with a user retention rate of over 50% and an estimated long-term net profit rate of 20%. According to the Report on Mobile Game in August 2020 by CNG, Condor Heroes Trio ranked the first in the new mobile game list in August only 12 days after its launch and topped CNG’s estimation list of new mobile games, with an estimated revenue of the first month being over CNY 300 million. In addition, CMGE will launch 12 major IP-based games in the second half of 2020. It is predicted that FYs 2020 and 2021 will also see excellent revenue performance contributed by The King of Fighters: All Stars and One Piece: The Voyage distributed by ByteDance and Monster List: Past and Present and Dynasty Warriors: Hegemony distributed by Tencent.

CMB International will still keep optimistic about the growth of CMGE in FY 2021 due to about 20 major IP-based games under preparation.