Tanwan (9890) H1 2024 earnings summary

Executive summary

• H1 revenue was RMB3,225.8m, down 5.1% YoY; gross profit rose 3.1% to RMB2,364.2m, but results swung to a RMB385.0m net loss from RMB300.3m profit.

• Revenue mix shifted toward higher-margin self-run games, while weaker joint-run revenue, lower other income and substantial other expenses weighed on results.

Financial highlights

• Revenue was RMB3,225.8m, down 5.1% YoY; cost of sales fell 22.1% to RMB861.6m, gross profit rose 3.1% to RMB2,364.2m and gross margin expanded to 73.3% from 67.5%.

• Loss before tax was RMB416.4m versus profit before tax of RMB442.7m; net loss was RMB385.0m versus net profit of RMB300.3m. Basic and diluted loss per share were RMB0.74.

• Other income and gains fell 79.6% to RMB78.7m; other expenses rose to RMB367.1m from RMB3.8m, including investment and impairment losses.

• Selling and distribution expenses rose 17.2% to RMB2,288.8m, mainly due to promotion and advertising for new games; R&D costs fell 14.1% to RMB74.5m.

• Income tax was a credit of RMB31.4m versus an expense of RMB142.4m in H1 2023.

Outlook and guidance

• Tiny Troopers entered public testing; Wandering Five Thousand Years and Soul Land: Legend of Evil Slayer opened pre-orders as further releases were prepared.

• Strategy prioritizes precision marketing, deeper game operations, a digitized multi-category portfolio, integrated R&D and operations, and continued global expansion.

• Plans include continued operation of medium-to-heavy app games and expansion into light, casual mini-games through multiple approaches.