Forgame shifts focus to mobile game market
Forgame, a Guangzhou-based webpage game developer, said it would expand into the mobile game market and broaden its reach in the global market to bolster revenue growth.
The company is offering 31.37 million shares at a range of HK$43.50 and HK$55 per share to raise as much as HK$1.72 billion in its Hong Kong initial public offering. Pricing is slated for next Thursday and trading is expected to start on October 3.
"In the next 18 months, we will launch 35 new games, of which 18 will be mobile games," said Wang Dongfeng, the chairman and chief executive of Forgame.
Wang said mobile games would be "the next important strategic growth point" for the company and it had shifted its operations focus from webgames to mobile games.
Market analysis firm Niko Partners' said in its latest report that China's mobile game market - which raked in US$750 million in revenue last year - would grow to US$1.2 billion this year.
Forgame's costs for games' research and development was 43 million yuan (HK$54.4 million) in the first half of this year, up from 14 million yuan a year earlier.
Chief financial officer Gary Ngan King-leung said: "We are investing lots of resources in the explosive phase of mobile business to prepare for future development."
Wang said Forgame was looking at the international market and aimed at increasing its overseas business to account for 20 per cent of revenue "within two years" from "a very small proportion" now.
"It's a trend for Chinese games to go overseas," he said.
About HK$543 million, or 60 per cent of the proceeds from the share sale, would be used to acquire webgame and mobile game licences and game developers, the company said.
Twenty per cent of the proceeds will be pumped into expanding the game business, building network infrastructure and hiring talent, while 10 per cent will be used to fund international operations, including the setting up of subsidiaries and offices. The rest will be working capital.
Founded in 2009, the company has launched more than 30 games. Revenue rose to 777 million yuan last year from 384 million yuan in 2011.