NetDragon's spin-off of mobile internet business gets green light

PUBLISHED : Friday, 08 February, 2013, 12:00am
UPDATED : Friday, 08 February, 2013, 3:53am

NetDragon Websoft, China's seventh-largest online gaming company, has received approval from the Hong Kong stock exchange to spin off and separately list its mobile internet business on the Growth Enterprise Market.

In a filing yesterday, NetDragon chairman Liu Dejian said the company's audited results for last year, excluding the mobile internet business, must meet the minimum profit requirements under the Listing Rules.

"Barring any unforeseen circumstances and depending on market condition, the company will proceed to submit the listing application form to the stock exchange as soon as practicable and make an announcement," Liu said.

Based in Fuzhou in Fujian province, NetDragon develops and operates online games on the mainland. Data from JP Morgan showed NetDragon had an estimated 2.3 per cent share of the domestic market last year.

The total mainland online games market was estimated to be worth 53.14 billion yuan (HK$65.4 billion) last year, with Tencent controlling a 49.6 per cent share.

NetDragon's mobile internet business is under its 91 Wireless subsidiary, which contributed 86.1 million yuan to the company's total 290.1 million third-quarter revenue last year.

While it expected "attractive growth" in total revenue for last year, NetDragon issued a profit warning last week. It expected "a significant decrease" mainly due to increased losses from the "changes of fair value and the finance cost of redeemable convertible preferred shares", compared with its net profit in 2011.

The share price of NetDragon fell 2.94 per cent to close at HK$10.58 yesterday.