Web game not bad money? Valuation as a problem

After a few consecutive years of market lows, China's online gaming industry may open a new round of the IPO boom. Including the Kunlun worldwide, fun tour, including a number of web game companies, are speeding up their own pace of listing.

How should the capital market be valued in the face of these web game companies with good profitability and high margins? There is a lot of controversy in the industry.

"The valuations of web game companies are certainly not high. "The industry's excessive competition and lack of sustainable growth are the biggest obstacles to the listing of Web game companies," said vice president of a large Shanghai web-game company.

Others are very optimistic about the growth prospects of web games, the famous angel investors, 4399 Games chairman Cai said in the phone: "We still very optimistic about the development of the entire web game market." ”

Web game not bad money?

Recent information disclosed by the SFC shows that Beijing Kunlun million-dimensional technology is applying to the gem listing, the application is still in the preliminary examination.

Another large web game company Fun Tour is likely to be listed this year's fun tour has just appointed a new CFO Rai Souming, he has led the core international, Palm letter Choi Tong, handheld, such as a number of companies listed, the FireWire to join the Fun tour, was interpreted as fun Tour officially launched the listing logo. A game group close to the fun, said the fun tour is assessing whether to go to the United States or Hong Kong listing.

In addition, the Shanghai tour clan and 4399 games and other web game companies have similar signs. The long, sleepy Chinese online gaming industry is likely to usher in a new wave of listings again.

The reporter learned that most of the planned listing of the Web game companies are not lack of money. The web game company vice president revealed that the domestic first-line web game companies, revenue and profits are very alarming, the monthly revenue of most billion, the gross margin is surprisingly high, the listing is not urgently needed funds.

Some insiders believe that the launch of web game companies may be like the video industry, directly pushing up the price of the upstream copyright of the current domestic one year good web game on so several, listed companies are likely to throw heavily to raise the price of the game. But a contrary point of view, the game industry is more special, some of the first listed enterprises, and does not necessarily use the capital advantage and unlisted web game companies to pull the gap. "Zhong Qing bao (300052, Stock bar) and the washing rice listed, also did not significantly enhance its position in the industry." "said the vice president of the Web game company.

This is because good web game profitability is quite astonishing, if one or two game success, a year's revenue can also exceed 1 billion, its capital reserves is not worse than the listing financing. For some web game companies that want to develop overseas markets, listing can give them additional benefits, such as raising their visibility in overseas markets. At present, the Kunlun million peacekeeping fun tour will be overseas market as an important direction.

In addition, listing helps improve the security of the Web gaming company's finances. Because the web game industry's revenue is very unstable, it is likely because of a certain one or two games and ups and downs listed funds to help ensure that the company's cash flow reserves.

Cai points out that although the client online games did not develop as before, but the entire game market, including web game, casual games, social games, still maintained a growth rate of 100% per year.

According to the latest data, the 2011 China web game users pay market size reached 4.81 billion yuan, an increase of 44.9%. The latest research data of Yi-Zhi database also shows that 2012 China's web game market users will reach 75 million, the chain growth of 36.4%; it is expected that the next few years will continue to grow, in 2014, China's web game market user size or will reach 97.5 million.

In the view of the above-mentioned web game VP, the listing of web games also faces policy hurdles. At present, most of the web games are very vulgar in the publicity often play pornography, violence, and has been considered to be the culprit of poisoning the youth, the state authorities to regulate the web game market voice.

Valuation as a problem

How do you value these cash-flow web game companies? There are big differences in capital markets at present, but the more common view is that the valuation of web games is certainly not high.

The Internet industry analyst at a large domestic brokerage said that, according to the current a-share market, the media, the Internet sector companies are usually about 25 times times earnings.

"A-shares are now very rational about the valuations of online games. "The Internet industry analyst said, experienced the listing of the Chinese market, a A-shares in the game companies have more understanding of the situation, online gaming enterprises in the gem is difficult to send a very high price."

Even so, the 25 times-fold P/e ratio is already very high relative to U.S. stocks, with a few multiples of more than 9 times times that of Chinese gaming companies such as Shanda, Giants and Kowloon City. At present, the giant network is only 8 times times more than the price/earnings ratio, the Shanda game is only 6 times times, its share prices depressed situation can be seen. The industry generally believe that the Web game company's valuation than Shanda, giants and other companies lower. As a result, many companies that are not in urgent need of financing still want to be listed in a shares.

In foreign countries, web games are not a mainstream game, and how overseas investors see this model is another factor affecting valuations.

The biggest uncertainty about web game companies is their ability to grow sustainably. "There are very few web games that dare say I can keep booming for more than 3 years." Said Vice president of the Web game company.

Because the competition of webpage game is very intense, already not Red Sea, but "blood of Blood". And legends, World of Warcraft, such as large client games, web games, most of the emphasis on fast, game companies are also more holding the mentality of earning fast money. In some web game design, the player can easily in a day and so on to practice to 100 multi-level, many game companies with cashing on the mentality of walking.

Web game companies are divided into research and development and operation of two. Kunlun million peacekeeping fun tour belongs to the operating company, that is, looking for the development team to develop the game and then run their own. As an operating company, they also need to face a problem is that Tencent and other traffic giants began to turn themselves into operators. In the promotion of web games, Tencent, Baidu, 360 of such traffic giant's position is very important. Tencent relies on its huge traffic and cooperative game developers to sign a very harsh treaty developers can only score 20% of game revenue.

Now, Tencent and other giants began to support their own games, such as Tencent's highest-earning web game "seven-male hegemony" is Tencent's holding subsidiaries developed, and Baidu is believed to be supporting their own games.

In order to solve this embarrassment, the Kunlun million peacekeeping and other companies have begun to explore overseas markets, and achieved certain success.

In order to strengthen overseas market development, the Kunlun worldwide introduced Huawei's investment at the end of last year, for the specific shares of funds, there is a saying is 100 million yuan, also said up to hundreds of millions of yuan. Huawei has said it is inconvenient to comment on the matter.

Wenrui Research Consulting Division director Gao Dongxu pointed out that the web game mainly through the Internet to promote, and the Internet relies on the basic telecommunications network, Huawei's assistance, can make Kunlun use its existing channels, to reduce the risk of kunlun in overseas promotion channels. For example, Huawei played a role in the opening of the Turkish market in the Kunlun Mountains last year.

Will the future of the Kunlun million peacekeeping tour be able to rely on these experiences to form sustainable growth? is what they need to focus on to investors.