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Zen Travel Technology: relying on the landlord to go public? Betting risk behind a single revenue

April 15, 2019 00:54
source: Investor network

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Summary
[Zenyou Technology: relying on the landlord to go public? The risk of gambling behind the single revenue] In the current days of the glory of the king, "eat chicken" and so on, the ground-breaking landlord’s mobile game seems to be inconspicuous, and a company that lives on a chess game such as a landlord- - Zen Travel Technology (02660.HK) is going to go public in Hong Kong.

In the current days of the glory of the king, "eat chicken" and so on, the ground-breaking landlord's mobile game seems to be inconspicuous, and a company that lives on board games such as landlords -Zen Travel Technology(02660.HK) is going to go public in Hong Kong.

As early as April 3,Zen Travel TechnologyOfficially announced the renewal of the prospectus through the hearing of the Hong Kong Stock Exchange. According to media reports, the IPO price is 1.23 Hong Kong dollars, the offer price is 1.12-1.32 Hong Kong dollars, is expected to be listed on April 16.

It is worth mentioning that Zen Travel Technology has a strong “Tencent Gene”: According to public information, one of the founders of the company, Li Qing, was one of the early founders of Tencent and is still the company’s third largest.shareholderThe core team of Zen Travel Technology is from Tencent. CEO Ye Sheng has served as product director of QQ Game Products Department. CTO Yang Min has served as R&D director of QQ Game Department.

However, Zen Travel Technology's revenue relies heavily on chess and card games. It not only has a single revenue, but also faces the policy risk of anti-gambling supervision. How can the company be independent in the depressed game market?

In response to related issues, "Investor Network" contacted Zen Travel Technology and wrote a letter, the other party did not reply.

  Revenue depends on landlords

According to the online information of Zen Travel Technology, Zenyou Technology Holdings Co., Ltd. is a mature mobile game developer and operator in China, with a special focus on chess and other casual mobile games. It is understood that from the beginning of its establishment in 2010 to the present, the company has a total of 44 games, including 19 card games, 12 chess games and 13 other games.

According to the Frost & Sullivan report, Zen Travel Technology ranks fifth in the domestic chess and card mobile game market in terms of 2017 revenue, accounting for about 4% of the market share, and its landlord series games have a monthly live number of 17.3 million. Ranked third in the market.

According to its prospectus, in 2016-2018, the total revenue of Zen Travel Technology was 338 million yuan, 460 million yuan and 555 million yuan respectively, of which landlord game revenue was 285 million yuan, 428 million yuan and 421 million yuan. The game revenue share was 84.39%, 93.09% and 87.41%. In addition, all revenues from 2017 and before were from game operations, with game revenue accounting for 87.6% in 2018.

At present, Zen Travel Technology still maintains its business strategy of fighting landlords as its main business.

As of December 31, 2018, the landlord series realized revenue of 421 million yuan, the monthly number of paid users was 1.013 million, the average revenue per paying user (ARPPU) reached 35 yuan, the number of daily active users was 5.145 million, and the number of monthly active users reached 2163.3. Million.

In a nutshell, Zen Travel Technology's revenue structure is quite singular, relying heavily on game revenue, and relies mainly on the Landlords series.

However, since May 2018, Zen Travel Technology has placed advertisements in the game, and since then the company has had other incomes than game operations. In addition, in the second half of the year, Zen Travel Technology hired seven advertising companies to prepare for the expansion of in-game advertising. In 2018, game revenue accounted for 86.7% of total revenue, and the remaining 13.3% of revenue came from in-game advertising. The annual advertising revenue reached 73.637 million.interest rateReached 100%.

  Risk involved in gambling

Due to the game version control and other reasons, the game industry is in a low tide, and the market environment of chess and card games is not optimistic. Among the many game types, chess and card games are more sensitive, and they have always faced virtualcurrencyAnd anti-gambling regulatory risks.

In fact, chess and card games have not been spared from policy regulation. Last year, a major storm has profoundly affected the field of chess and card games.

In April 2018, the old chess and board platform operator BeijingLianzhongThe company's chess and card division, which used the online game platform to open a casino, was arrested by 36 vice-presidents of Qinzhong, Xu, who is the head of the chess division, and other criminal suspects, and frozen more than 65 million yuan of funds involved. Although the next day, Lianzhong announcedSuspension, butResumption of tradingThe stock price fell 22.07% on the day. It is reported that since 2010, the “Texas Hold'em” project affiliated to Lianzhong Chess & Cards has accumulated 335 million gambling funds.

The regulatory crisis caused by this has not stopped.

On June 14, 2018, the General Office of the Ministry of Culture and Tourism issued a notice of advice on the rectification of chess and card games. According to the "Notice of the General Office of the Ministry of Culture and Tourism on the implementation of the special rectification actions for gambling-related online games", the Ministry of Culture and Tourism will launch a two-month rectification of gambling games in the country. action.

August 9,appleThe AppStore has a number of apps, mostly game apps, of which more than 4,000 are available for casino games (ie, chess and gambling games). The Apple Review team stated in an email to developers that the move was in line with the government’s remediation of illegal online gambling apps.

In September, Tencent’s “Days of Texas”, “Happy Three” and “Happy Chess” games were released from the market.announcementBefore the delisting, "Daily Texas" ranked second in the WeChat chess game list.

Zen Travel Technology is also aware of the risks involved in gambling. It is mentioned in the prospectus: the company cannot guarantee that domestic laws and regulations on virtual currency and anti-gambling will not affect the company's business, if we fail or are deemed Failure to comply with these and other regulatory requirements or laws, regulations and regulations may result in damage to your reputation and litigation or action by government agencies.

For the influence of the game version tightening policy since 2018, Zen Travel Technology once said: "The version policy has been relaxed at the end of last year. After the relaxation, the company has already got two new editions, and the application number is also The meeting will continue to be in place. In the long run, the policy will not affect us."

Chanyou Technology said in its prospectus that "the company is actively seeking to develop and launch new high-quality games to increase its revenue, expand its game portfolio, diversify its revenue sources to enhance its competitiveness and reduce the risk of over-reliance on a single game."

However, most of its funds for listed financing are used to maintain the development of the original business. Of these, 25.1% were used for maintenance and maintenance of the original game, 10.1% for game operation technical support, 30.2% for marketing promotion, and 9.4% for daily operations.

It can be seen that the listing is only to consolidate the development of the old business, and it is difficult to bring qualitative changes to Zen Travel Technology.

Zen Travel Technology faces a severe market and policy environment. The choice of listing seems to have a desperate meaning. Is this a “listing is the peak” or a contrarian trend? I will wait and see.

(Article source: Investor Network)

                (Editor: DF353)

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