Revisiting Zengame (Hkex: 2660)

 Zengame is one of the game companies that has very good results in 2021. It prompted me to relook at the stock and where it stands.

(Zengame's newest game in 2H 2021)

	1H 2020	2H 2020	1H 2021	2H 2021
Revenue	468,478,000	274,028,000	444,223,000	1,029,735,000
Net Profit	131,848,000	89,120,000	145,745,000	354,598,000
EPS	0.16	0.11	0.17	0.43
Div Per Share		0.06		0.15

Zengame's net profit surged on the back of an exceptional revenue in 2H 2021 thanks to their new mahjong game 'Fingertip Sichuan Mahjong(指尖四川麻将). 

The company has 2 flagship games. Fingertip Sichuan Mahjong and Zengame Fight the Landlord

As such, the company is trading at less than 4 PE and has a yield of 7.2% against its closing price of 2.06 HKD on 13 April 2022.

Company is currently trading at a book value of 1.38 and has 96 cents of net cash or 46% of its market cap.

How does the company's prospects look in 2022?

                                                                    Sichuan Mahjong Rankings

According to data, the mahjong game has performed decent in 2022. Although not as consistent as the levels of 2H 2021, the game has rebounded quickly from January.

                                                      Sichuan Mahjong Grossing Revenue Ranking

Looking at its top apps grossing rank, the company has recovered from a February low.

With the covid lockdown headwinds, the demand for such games is unlikely to die down so soon.

                                                     Zengame Fight The Landlord Rankings 

Its other game, zengame fight the landlord, has performed decent.

                                        Zengame Fight The Landlord Grossing Revenue Rankings

Its gross ranking has also showed a recovery after February.

It looks good for Zengame. However, careful monitoring of the company's pipeline of games and its 2 flagship games is needed.

Looking at its price chart, there seems to be some price manipulation going on as it did not go up immediately after the results was released despite higher volume. The increase in the latter stages to 2.56 was on smaller volume and a selldown has started 5 trading days ago.

As such, a good initial entry point based on my fail TA will still be at around 1.80. 

As for FA, the 1H 2022 will likely outperform 1H 2021, although currently it looks like it might not be as good as 2H 2022.

It was a company that i thought based on its Fight the landlord game, will do badly in 2021. It did so in 1H 2021 but totally turned the tables with mahjong in 2022.

(Mahjong Game Play)

(Mahjong Game Play)

(Mahjong Game Play)