Century Huatong's third quarter report: Net profit of 561 million yuan, a year-on-year increase of 174.58%

On October 30th, Century Huatong disclosed its report for the third quarter of 2023. The report shows that the company achieved a revenue of 3

On October 30th, Century Huatong disclosed its report for the third quarter of 2023. The report shows that the company achieved a revenue of 3.738 billion yuan in the third quarter, a year-on-year increase of 38.89%; The net profit was 561 million yuan, a year-on-year increase of 174.58%; The net profit after deducting taxes was 467 million yuan, a year-on-year increase of 181.59%. This quarter, the company's various business operations have shown a stable rebound momentum, with profit growth exceeding expectations, making it unique in the gaming industry.

Legendary IP Enters a New Stage

Overall, based on the disclosed regular reports, the company's cumulative revenue and net profit in the first three quarters have significantly improved, with the domestic gaming business playing a significant stabilizing role. During the reporting period, products such as "Legend of Blood", "Legend World", "Valley of Dragons", "Adventure Island", "Rainbow Island", "Final Fantasy 14", "Bubble Hall", and "Eternal Tower" all maintained long-lasting performance; E-sports products such as' Street Basketball 'continue to drive the development of events, with the SFSA National Super League covering over 170 million viewers; The card RPG mobile game "Legend of Seven: The Battle of Light and Darkness", introduced by Century Huatong and distributed by Tencent Game Agency, topped the iOS free list on its first day of launch and the TapTap hot list.

At the same time, the company has integrated multiple leading technologies such as AI generation models into many products of different scales on the research and development end, resulting in significant cost reduction and efficiency improvement. On the operational side, the company continued to improve the long-term operation level of its products and enrich the connotation of the game: on the occasion of the twentieth anniversary of Legendary World, the company joined hands with Yu Garden Mall, the landmark of Shanghai, to open cross-border linkage, not only to launch the exclusive "Yu Garden Garden Map" online, but also to creatively restore the characteristic buildings at the offline Chinajoy exhibition, and also to launch the co branded neighborhood with Yu Garden time-honored brands, further amplifying the commercial value of the advantageous IP. In terms of classic IP, Legendary series IP ushered in a significant positive. After reaching a new cooperation agreement with Legendary IP, a subsidiary of Yumeide, Altos successfully signed a contract with Lansha Information, a subsidiary of Shengqu Game, which enabled Shengqu Game to enjoy a complete monopoly of Legendary series IP in Chinese Mainland, and also made Legendary series IP achieve "unification" in Chinese Mainland. Subsequently, important partners including Kaiying Network, Zhongxu Future, Sanjiu Mutual Entertainment, and Sanqi Mutual Entertainment have successively signed contracts with the company to launch targeted new products and comprehensively promote the evolution of the legendary IP ecosystem. All of these advantages will have a positive impact on the company's future performance.

Annual New Product Generation Phenomenon Level Product

This quarter, the revenue growth of overseas games was relatively significant, such as the annual new product "Whiteout Survival" (Revelation of Frost) under Diandian Interactive, which achieved remarkable results in the overseas market. Not only in South Korea and Taiwan, China, China, it has been in the top 10 of the best selling list of iOS for a long time, but also in the largest U.S. market, where it has been in the top 10 of the best selling list of iOS for a consecutive month, becoming a phenomenal product. In the top 30 Chinese game manufacturers and applications with overseas revenue released by data.ai in September, "WhiteoutSurvival" successfully ranked in the top three, and Diandian Interactive also firmly ranked among the top 3 Chinese game manufacturers with overseas revenue, further consolidating its stable position among Chinese game manufacturers.

In fact, since 2019, Century Huatong has strengthened its self-developed products, and its Diandian Interactive continues to practice category micro innovation, strategically breaking through the track and forming a leisure game matrix. We have launched multiple high-quality game products, including FamilyFarmAdventure, ValorLegends: Eternity, DragonscapesAdventure, and FrozenCity, all of which have gained recognition from overseas markets. At present, the overseas revenue of Diandian Interactive self-developed games has exceeded 70%, maintaining a double-digit growth rate every year.

Expected to achieve computing power leasing revenue in the fourth quarter

Currently, emerging technologies represented by generative artificial intelligence are sweeping across the entire society, bringing unprecedented opportunities to the computing power business of companies. In order to accelerate the promotion of relevant business layout, the company integrates business resources related to artificial intelligence and cloud data, and upgrades the "Cloud Data Division" to "Artificial Intelligence Cloud Data Division". During the same period, the company also deepened its business cooperation with its strategic partner Tencent Cloud, obtaining 1.1 billion computing power leasing orders; Sign a strategic cooperation agreement with Litong Electronics to establish a joint venture company for AI computing power service projects, and fully promote the construction of intelligent computing power.

As of now, the Tencent Yangtze River Delta Artificial Intelligence Advanced Computing Center project, in which the company has deeply participated in investment, has delivered thousands of cabinets and gradually put them into operation. After all of them are completed and put into operation in the future, it will become the largest artificial intelligence computing center in the Yangtze River Delta, the top three in China, the leading in Asia, and the largest GPU computing cluster in China. The first phase of the Shenzhen Data Center project located in Guangming District, Shenzhen has achieved its first delivery, and the second phase of the project is about to begin construction. In addition, the first batch of dozens of GPUs for the intelligent computing power business has arrived, and it is expected to achieve computing power leasing revenue in the fourth quarter, thereby helping the company accelerate the construction of the "second growth curve".

Continuously deepening the implementation of sustainable strategies

Since proposing the sustainable development strategy, Century Huatong has closely focused on relevant themes, continuously improving the company's various governance, and promoting all employees to practice precision and goodness. During the reporting period, the company's ESG construction took it to another level. In terms of internal control, the Group Data Security Committee was established in August, which is fully responsible for formulating and improving the data security management system of the enterprise, and promoting the implementation and implementation of relevant systems to strengthen the data security barrier. In terms of social responsibility, the company assisted in the release of the first "Shanghai Internet Usage Survey Report for Minors"; Promote the development of green game reminder mechanisms; Jointly promote the first digital collection in Shigatse, Xizang, with Shanghai's assistance to Tibet, promote local traditional crafts into modern life, and promote rural revitalization with the inheritance practice of intangible cultural heritage; During the reporting period, its subsidiary Shengqu Games also took the lead in participating in the first Game Empowerment Exhibition as the chairman unit of the Shanghai Online Game Industry Association, comprehensively showcasing the results of game empowerment.

Looking back at the company's performance in the first three quarters, it was demonstrated that the strategic reshaping effect of the management team was significant, and the trend of performance recovery was strong. In the future, Century Huatong will continue to make every effort to promote the development of various businesses, promote the company's profitability to return to the rising channel, and strive to maximize shareholder rights and social interests.

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