FINGERTANGO(06860)2024-04-30 08:34Financial Performance - Total revenue for 2023 was RMB 646.1 million, a decrease of 22.4% compared to RMB 832.5 million in 2022[12] - Gross profit for 2023 was RMB 371.9 million, down from RMB 529.8 million in 2022, reflecting a gross margin of approximately 57.6%[12] - The company reported a net profit of RMB 6.8 million for 2023, a significant recovery from a net loss of RMB 139.4 million in 2022[12] - The cost of revenue was approximately RMB 274.2 million, a decrease of about 9.4% compared to the previous year[30] - Sales and marketing expenses were approximately RMB 305.7 million, a decrease of about 25.2% year-on-year, accounting for about 47.3% of total revenue[33] - Administrative expenses for the reporting period were approximately RMB 51.6 million, a decrease of about 29.7% or RMB 21.9 million compared to the same period last year, mainly due to reduced employee benefits and bad debt losses[34] - Research and development expenses amounted to approximately RMB 70.9 million, a decrease of about 9.5% or RMB 7.5 million compared to the same period last year, primarily due to reduced employee benefits[35] - Other income and gains recorded were approximately RMB 63.1 million, compared to other losses of approximately RMB 106.0 million in the same period last year, mainly due to fair value increases of investments and reversals of provisions for certain receivables[36] - The group recorded a profit of approximately RMB 6.8 million for the reporting period, compared to a loss of approximately RMB 139.4 million in the same period last year, mainly due to reduced advertising and promotional expenses and increased other income and gains[41] Assets and Equity - Non-current assets totaled RMB 186.8 million as of December 31, 2023, compared to RMB 149.1 million in 2022[12] - Current assets decreased to RMB 825.1 million in 2023 from RMB 907.1 million in 2022, indicating a focus on liquidity management[12] - The total equity increased slightly to RMB 785.7 million in 2023 from RMB 777.8 million in 2022, showing stability in the company's financial position[12] - As of December 31, 2023, current assets were approximately RMB 825.1 million, including cash and bank balances of approximately RMB 534.5 million, a decrease of about 21.7% from RMB 682.8 million as of December 31, 2022[42] - The current ratio as of December 31, 2023, was 3.9, compared to 3.5 as of December 31, 2022[42] - As of December 31, 2023, the group had no bank borrowings or other debt financing obligations, resulting in a debt-to-equity ratio of zero[42] Market and Growth Strategies - The company plans to enhance its marketing strategies and explore innovative promotional channels to adapt to the changing gaming market conditions[14] - Future growth strategies will focus on sustainable development and leveraging the management team's market insights and operational capabilities[14] - The company aims to maintain a patient and ambitious approach to navigate the complexities of the global gaming market[14] - Monthly active users (MAUs) reached 3.4 million, an increase of 32.3% year-on-year, while the total registered user base grew by 13.5% to 231.8 million[23] - The Chinese gaming market's actual sales revenue reached RMB 302.96 billion in 2023, a year-on-year increase of 13.95%[18] - The mobile gaming market in China generated actual sales revenue of RMB 226.86 billion, reflecting a year-on-year growth of 17.5%[18] Corporate Governance and Management - The board does not recommend the payment of a final dividend for the year ending December 31, 2023, consistent with the previous year[67] - The company has engaged a Hong Kong law firm to issue a demand letter to the issuer regarding the outstanding notes amounting to HKD 250 million[114] - The board underwent significant changes, with new members appointed in June and August 2023, indicating a strategic shift in governance[86] - The company appointed Dr. Chen Wenfeng as an executive director and member of the remuneration committee effective June 29, 2023[102] - The company appointed Mr. Jiang Huihui as an independent non-executive director and member of the audit, remuneration, and nomination committees effective June 29, 2023[102] - The chairman and CEO roles are held by the same individual, Liu Jie, who has been pivotal in the company's strategic development since its establishment in 2013[179] - The board will continue to review and monitor the company's conduct to maintain high standards of corporate governance[180] - The company has confirmed that all directors complied with the standards of the securities trading code during the reporting period[184] Legal and Compliance - The company has not identified any significant violations of relevant laws and regulations during the review year[62] - The company is subject to potential scrutiny from Chinese tax authorities regarding its contract arrangements, which could impact net income and investment value if additional tax liabilities are identified[165] - The company has received exemptions from the Hong Kong Stock Exchange regarding compliance with certain listing rules related to its contract arrangements, allowing for more flexibility in transactions[169] - The arbitration process for disputes is governed by the China International Economic and Trade Arbitration Commission, with decisions being binding and enforceable in relevant jurisdictions[168] - The company’s legal advisors believe that its contract arrangements do not fall under invalidating conditions outlined in Chinese contract law, although future legal interpretations remain uncertain[166] Investments and Financial Products - The group held significant investments, including the Zhongzhou Longteng Growth Fund, with a fair value of RMB 75.6 million as of December 31, 2023, representing 29.2% of the group's total assets[50] - Investments measured at fair value through profit or loss amounted to approximately RMB 258.7 million as of December 31, 2023, with a significant increase due to various financial products[54] - The company has engaged in various financial products, including investments of RMB 30 million each in multiple wealth management products with expected annualized returns ranging from 2.70% to 3.56%[84] Risks and Challenges - The company faces risks related to contract arrangements, particularly concerning foreign ownership restrictions in China, which could lead to severe consequences if agreements are deemed non-compliant with local laws[161] - In the event of bankruptcy or dissolution of the Chinese operating entity, the company may lose access to significant assets, but has provisions for asset sales under applicable Chinese law[163] - Shareholders of the Chinese operating entity have committed to avoiding conflicts of interest that could adversely affect the business during the contract's validity[165] Related Party Transactions - The independent non-executive directors have confirmed that the related party transactions for the year ending December 31, 2023, were conducted in the normal course of business and on normal commercial terms[174] - There are no disclosed related party transactions that require reporting under the listing rules[148] Subsidiaries and Operational Control - The company has established contractual arrangements to exercise control over the Chinese operating entity, allowing its financial performance to be consolidated into the company's results[152] - The Chinese operating entity operates in the internet culture business, which is classified as "prohibited" for foreign investment under current regulations[151] - The company holds all necessary operating licenses, including the network culture operating license and ICP license, through the Chinese operating entity[159]