- Offer Price between HK$11.20 and HK$14.00 per Share
- To Raise Gross Proceeds betweent HK$952 Million to HK$1,190 Million
- Integrated research and operation model creates popular games
- Gains support from industry-leading strategic investors
An established mobile game developer and publisher in China, Qingci Games Inc., today announced the proposed listing of its Shares on the Main Board of The Stock Exchange of Hong Kong Limited.
Summary
— As an established mobile game developer and publisher in China, Qingci Games ranked third and second among all mobile game companies in China in 2020 in terms of gross billings from casual games and idle games, respectively. Also, Qingci Games ranked second among all mobile game companies in China in 2020 in terms of gross billings from self-developed rogue-like RPGs.
— The Group’s self-developed idle game The MarvelousSnail generated gross billings exceeding over RMB400 million in the first month following its launch and had an average MAU of 4.4 million from June to December 2020. It also obtained the ranking of No. 2 on the iOS Bestseller Games List in China in 2020.
— “QingCi” brand had attracted a large, loyal and active player base that forms Qingci Game’s player community – “QingCi community.” The Group had 10.4 million QingCi Enthusiasts on its official accounts and groups on social media platforms.
–The Group was supported from industry-leading strategic investors that are leading players in the mobile game industry, including G-bits Network Technology (Xiamen) Co., Ltd., Tencent Mobility Limited, Alibaba Group Holding Limited and Bilibili Inc.. Institutions such as Qookka Entertainment Limited, Boyu Capital Group Holdings Ltd. and GF Global Capital Limited also get involved as cornerstone investors.
— The Group continues to develop and license in high-quality mobile games, such as parkour, SLG(including tower defense and others), ACT, STG and ACT RPG. As of the Latest Practicable Date , the Group operated six mobile games and had a pipeline of 10 mobile games.
— During the Track Record Period, the Group recorded strong financial performance. In 2020, its revenues amounted to RMB1,226.9 million, representing a CAGR of 253.1% from 2018 to 2020. Moreover, in 2020, its adjusted net profit for the year (non-IFRSs) amounted to RMB166.2 million, representing a CAGR of 106.8% from 2018 to 2020.
Offering details
Qingci Games plans to offer 85,000,000 Shares (subject to the Over-allotment Option), of which 76,500,000 Shares will be international offer shares (subject to reallocation and the over-allotment option), representing 90% of the initial offer shares; the remaining 8,500,000 Shares will be Hong Kong offer shares (subject to reallocation), representing 10% of the initial offer shares. The offer price is between HK$11.20 and HK$14.00 per Share. Assuming that the offer price is HK$12.60 per Share (being the mid-point of the indicative offer price range of HK$11.20 to HK$14.00), the net proceeds from the global offering that the Group will receive after deducting the underwriting commissions and other estimated expenses paid and payable by it in connection with the global offering (assuming that the over-allotment option is not exercised) will be approximately HK$978.0 million.
Qingci Games will open for Hong Kong public offering in Hong Kong at 9 a.m. on December 6, 2021 (Monday), and close at 12:00 noon, December 9, 2021 (Thursday). Dealings in Shares of Qingci Games on the Main Board of the Hong Kong Stock Exchange is expected to commence on December 16, 2021 (Thursday). The Shares will be traded in board lot of 500 Shares each. The stock code of the Shares is 6633.
— China International Capital Corporation Hong Kong Securities Limited and CLSA Capital Markets Limited are the Joint Sponsors
— China International Capital Corporation Hong Kong Securities Limited and CLSA Limited are the Joint Representatives
— China International Capital Corporation Hong Kong Securities Limited, CLSA Limited and China Merchants Securities (HK) Co., Limited are the Joint Global Coordinators
— China International Capital Corporation Hong Kong Securities Limited, CLSA Limited, China Merchants Securities (HK) Co., ABCI Capital Limited,Guotai Junan Securities (Hong Kong) Limited, TFI Securities and Futures Limited and Valuable Capital Limited are the Joint Bookrunners.
— China International Capital Corporation Hong Kong Securities Limited, CLSA Limited, China Merchants Securities (HK) Co., Limited, ABCI Securities Company Limited, Guotai Junan Securities (Hong Kong) Limited, TFI Securities and Futures Limited and Valuable Capital Limited are the Joint Lead Managers
Cornerstone investors
Under the international offering, the Group has six cornerstone investors. Among them, Qookka Entertainment Limited (ultimately owned by Alibaba Group Holding Limited) and Boyu Capital Group Holdings Ltd. (managed by Boyu Capital Investment Management Co., Limited) are the current shareholders of the group. They will subscribe for US$10,000,000 and US$15,000,000, respectively. The six cornerstone investors will subscribe for a total of approximately USD$70 million based on the offering price.
Investment highlights
Captivating game content, Bring distinctive play experiences to players (especially the young generation)
As a leader in casual games, especially idle games, and rogue-like RPGs in China, the Group has developed, published and operated a number of popular games, including the rogue-like RPG Gumballs & Dungeons launched in August 2016, the idle mobile game The Marvelous Snail launched in June 2020 and the rogue-like RPG Lantern and Dungeon launched in March 2021. The Marvelous Snail has gained phenomenal attraction since its launch.
— As of August 31, 2021, The Marvelous Snail had recorded RMB2.0 billion in total gross billings with over 20.6 million cumulative registered players. This game obtained the ranking of No. 2 on the iOS Bestseller Games List in China, and it ranked among the iOS Top 10 Bestseller Games List in China for more than 80 days in 2020.
— Gumballs & Dungeons topped the iOS Paid Games List in China for over 70 days in 2017 and had over 23.3 million cumulative registered players as of June 30, 2021-making it a benchmark game in China’s rogue-like RPG category.
— Lantern and Dungeon also enjoyed wide popularity, with its gross billings exceeding RMB185 million and its MAU reaching 3.8 million in the first month following its launch. In addition, Lantern and Dungeon topped the iOS Top 10 Free Games Chart in China for six consecutive days after its launch and obtained the ranking of No. 4 on the iOS Bestseller Games List in China.
In addition, young players generally have a strong desire for premium content, personal expression and distinctive experiences and they are generally more receptive to games with compelling storylines and renowned IPs. They appreciate innovative plots and game rules, as well as spoof elements, and prefer to use their fragmented time to play mobile games. As a result, idle games and rogue-like RPGs are particularly popular among the young generation. According to the Frost & Sullivan Survey, approximately 76% of the Group’s players are aged 30 or below, significantly higher than the industry average of 65%.
Strong content capabilities and systematic production and operation
In 2020, Qingci Games ranked third and second among all mobile game companies in China in terms of gross billings from casual games and idle games, respectively. Also, Qingci Games ranked second among all mobile game companies in China in 2020 in terms of gross billings from self-developed rogue-like RPGs. The Group’s portfolio includes games that are stylish, entertaining, and characterized by captivating content, distinctive game punchlines, striking designs and graphics, and often humorous twists, with each game incorporating features of multiple game genres, all of which make the Group’s games particularly popular among young players. The MAU of The Marvelous Snail consistently exceeded 2 million in the second half of 2020. Its average weekly player retention rate from its launch in June 2020 to June 30, 2021 reached 28%.
The Group’s proven, systematic approach to game development and operation is vital for it in transforming game ideas into successful game products effectively. The core components of the Group’s systematic game development approach include: (i) “goal decomposition”: after the game designers generate new and captivating ideas and content, the Group forms detailed action plans for each step during the game development process; (ii) “effective verification”: before a game is launched, the Group conducts multiple rounds of game testing by players, particularly the QingCi Enthusiasts, to verify the attractiveness of the ideas for the game and the effectiveness of the team’s action plan; and (iii) “frequent optimization”: based on player feedback collected, the Group rapidly and frequently update the game to meet player demands ahead of the game launch.
A virtuous circle fostered by a large, loyal and active player community
Supported by the strong willingness of game players, especially the young generation, to share game experiences with others, “QingCi” brand has attracted a large, loyal and active player base that is strongly attached to the Group’s games and forms its player community. As of October 31, 2021, the Group had 10.4 million QingCi Enthusiasts who were connected with the Group on its official accounts and groups on social media platforms. Specifically, the Group had more than 3 million followers on WeChat and more than 5 million followers on TapTap and operated approximately 340 super-large player groups (namely, groups with at least 1,000 participants each) on Tencent QQ, covering 532 thousand group members. The Group’s large and active player community has become a solid foundation for its creativity, product optimization, and game promotion-strengthening the appeal and influence of “QingCi” brand.
The Group’s frequent and close interactions with its QingCi Enthusiasts create a virtuous circle, as the feedback it collects from the players helps to develop and optimize the games, which in turn attract more active players. The Group has involved QingCi Enthusiasts in its community in multiple rounds of testing for pre-launch games, to optimize the gameplay and meet player expectations. For example, supported by the Group’s strong brand recognition and effective community connections, approximately 1.7 million of the 3.8 million registered players of Lantern and Dungeon were converted from the Group’s other games in the first month after its launch, despite their different genres and characteristics. Active interactions among QingCi Enthusiasts further enhance player stickiness and monetization, and increase the recognition of the Group’s “QingCi” brand. This serves as a testament to a virtuous cycle that the Group has established within the Group’s QingCi community.
Strong publishing and operation capabilities leading to successful monetization
The Group’s publishing model, based primarily on targeted marketing campaigns, supplemented by effective traffic acquisition, has enabled it to obtain more player traffic cost-effectively and enhance long-term brand value. For example, the gross billings generated through the Group’s self-operated distribution channels, TapTap (which charges no commission) and the iOS App Store, in aggregate, contributed approximately 90.4% of the total gross billings of The Marvelous Snail in China in 2020, and approximately 97% of the total gross billings of Lantern and Dungeon in China in the first six months of 2021.
The Group had strong capabilities in applying customized approaches to game publishing and operation, coupled with its ability to capture evolving market trends for game publishing and distribution. The Group has quickly adopted new channels in game publishing and established close partnerships with popular vertical distribution channels, such as TapTap and Bilibili, which helps it reach its target audience, particularly young players, more effectively. The Group tailors its publishing and operation approaches for each of its games based on its characteristics, players’ interests, and distribution channels’ features. The Group uses multi-dimensional data analytics tools to generate various operational indicators and collect extensive feedback, which provide input that it can apply in subsequent version updates and refinements of our monetization strategies. The lifecycles of the Group’s games in operation as of November 27,2021 generally ranged from 60 to 96 months, significantly longer than the industry average for idle games and for Rogue-like RPGs, according to Frost & Sullivan. In 2020 and the six months ended June 30, 2021, the ARPPU of the Group’s games was RMB206 and RMB221, respectively, which were significantly higher than the industry average, according to Frost & Sullivan.
Innovative, experienced and stable management team and core game producers and support from industry-leading strategic investors
Qingci Games’ core management team members are committed to innovation and quality. The Group’s founder and chairman, Mr. Yang Xu, has been deeply involved in the game industry for more than 15 years. He has participated in the development of large-scale games such as Wen Dao. He has extensive experience in the development and operation of multiple genres of mobile and other games, and has been leading the Group to advance innovation in our industry. Meanwhile, a majority of the Group’s core management team members have collaborated for more than eight years. They possess in-depth industry insights, and strong game development capabilities. Moreover, the Group had a core game producer team, each member of which has over 12 years of experience in game development, publishing and operation. This team has led the development of all the Group’s self-developed landmark games, as well as several games in its pipeline.
Remarkably, the Group’s strategic investors that are leading players in the mobile game industry, including G-bits Network Technology (Xiamen) Co., Ltd., Tencent Mobility Limited, Alibaba Group Holding Limited and Bilibili Inc., have extensive expertise and resources in the mobile game industry and boast innovative visions and successful track records in game development, publishing and operations.
Use of Proceeds
Assuming that the Offer Price is HK$12.60 per Share (being the mid-point of the indicative offer price range of HK$11.20 to HK$14.00), the net proceeds from the global offering that the group will receive after deducting the underwriting commissions and other estimated expenses paid and payable by it in connection with the global offering (assuming that the over-allotment option is not exercised) will be approximately HK$978.0 million. The group intends to use the net proceeds for the following purposes:
Use of Proceeds: Approximate Amount(HK$ million) As a Percentage of Total Amount
To expand game portfolio and invest in the Group’s game R&D capabilities and related technologies. 342.3 35%
To expand the Group’s business in the overseas markets within the next two to three years. 244.5 25%
To strengthen the Group’s game publishing and operation capabilities in China’s mobile game market and the market recognition of its “QingCi” brand and IPs. 146.7 15%
To pursue strategic investments in and acquisitions of upstream and downstream companies along the mobile game industry chain in the next three to five years. 146.7 15%
Working capital and general corporate purposes. 97.8 10%
Financial highlights
Year ended December 31, Six months ended June 30,
2018 2019 2020 2020(Unaudited) 2021
Revenues (RMB’000) 98,421 88,704 1,226,920 88,550 762,950
Gross Profit (RMB’000) 76,751 68,737 942,355 53,822 574,522
Gross Profit Margin (%) 78.0 77.5 76.8 60.8 75.3
Adjusted net profit/(loss) (RMB’000) 38,860 22,292 166,156 (144,015) 313,693
Net cash generated from operating activities (RMB’000) 40,122 6,801 443,601 15,588 109,451
About Qingci Games Inc.
Qingci Game is an established mobile game developer and publisher in China, offering mobile games that are designed to provide captivating content as well as distinctive and engaging gameplay experiences to players in mainland China and overseas. As a leader in casual games, especially idle games, and Rogue-like RPGs in China, Qingci Games has developed, published and operated a number of popular games. Its landmark mobile games, such as The Marvelous Snail have recorded significant gross billings and achieved high rankings on the game lists widely recognized in our industry.
Enquiries for investors and media:
Qingci Games
Investor relations
Email: ir@qcplay.com
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