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Chinese gaming firm iDreamSky stumbles in its Hong Kong debut
Chinese gaming company iDreamSky stumbled in its Hong Kong debut after a two-year hiatus from trading publicly and increased government regulation in the gaming sector.
The company’s shares sold at HK$ 5.9 (around $ 0.75) apiece at their lowest point before closing at HK$ 6.03, according to the Hang Seng Index.
Figures from the company’s IPO prospectus reveal that its revenue increased 44% year-on-year, reaching RMB 1.07 billion in the first half of 2018. According to third-party research company CNG, the Chinese mobile game market witnessed just 13% growth in the same period.
The company listed on the Nasdaq in 2014 before filing for privatization in June 2015, eventually delisting in September 2016.
Chinese regulators have halted approvals of new game titles since March, increasing their control over “cultural content,” with state-owned People’s Daily referring to Tencent’s hit game “Honour of Kings” as “poison.” The government claims the moves target myopia and gaming addiction among the country’s youth.
Considering that the date for resuming approvals is still pending, investors may assume that the best days for China’s gaming industry are already behind it.
“We will support the Chinese government regulations,” Jeffrey Lyndon Ko, co-founder and president of iDreamSky, said in a Bloomberg broadcast. “We believe that only with better regulatory standards, the industry can have sustainable growth.”
iDreamSky has attracted the attention of two of the world’s gaming giants—Tencent, holding a 20.65% stake as the largest institutional shareholder, and Sony, a cornerstone investor with a $5 million stake. This is the first time Sony has invested in a Chinese gaming firm and been involved in a Hong Kong listing.
JD.com, through its wholly owned subsidiary Windcreek Limited, is also a cornerstone investor, matching Sony’s holding in the company.
iDreamSky cooperates closely with Tencent in multiple areas, including services provided by Tencent Cloud, exclusive license grants, and IP development.