Friday, March 29, 2024
 
Columnist
Martin Hennecke
 
KINGSOFT
HKEx Stock Code : 03888 
 
Corporate Profile
The principal activities comprise the research, development, operation and distribution of online game, mobile game and casual game services; and the research, development, operation and distribution of internet security software, dictionary software and office application software online and offline products.

Business Review - For the year ended December 31, 2012

Mr. Jun LEI, Chairman of Kingsoft, commented, “2012 was a critical, encouraging and historical year for Kingsoft. The completion of MBO of Kingsoft WPS Offi ce subsidiary in July marked the completion of restructuring our three major subsidiaries. Kingsoft Internet Security has successfully transformed itself into an internet company with advertising revenue continued to break historical highs, supported by a rapid growing user base. JX Online III continued to improve its popularity and doubled its revenue, despite the slow growth of the overall MMO gaming market. As a Chinese leading office software, WPS Offi ce capitalized on a historic opportunity for development as the government continued to improve IPR environment. Leveraging the accelerated growth of mobile internet user base and smart devices in China, the active user base of Kingsoft Kuaipan, the first initiative of our strategic cloud business, has expanded further and topped the list of the similar services. I am pleased to announce Kingsoft's strategy, Three Plus One, has taken shape with three major existing business lines and one strategic new business line.”

Dr Hongjiang ZHANG, CEO of Kingsoft, added, “I am very delighted to report that in 2012, we delivered over 38% annual revenue growth and all business lines had a record year in terms of total revenue and operating metrics.”

Our existing games JX series continues its trend of revenue growth. JX Online III, our flagship 3D MMO game, doubled its revenue and APA in 2012, and significantly outpaced the growth rate of MMO gaming market. The successful launch of each expansion pack for JX Online III in 2012 has demonstrated our capabilities of capturing gamer's needs and optimizing gamer's experiences. During the year, we commercially launched three main game titles and further enriched our game portfolios, among which Ma La Jiang Hu, our fi rst Q version of 3D role playing game, has shown promising potential in terms of popularity and revenue. Also, we are actively pursuing the development of web and mobile games. Web game T3 and mobile game Pet Castle are in the pipeline to be released soon. Meanwhile, we invested Shanghai Quwan, a web game R&D studio, to grow our R&D capabilities in web games.

Kingsoft Internet Security has completed its transformation into an internet company and reached new milestones in its monetization capability. Advertising revenue has experienced a fast growth at triple-digit year-over-year, supported by our expanded user base of 150 million and improved monetization capability. We have also been actively developing other value-added services, especially web game operation. On 19 June, we officially launched its internet browser, Cheetah. With its stylish design and outstanding user experiences, the user base of Cheetah Browser has had tremendous growth. The creative marketing efforts for Cheetah, such as train ticket purchase applications, have also accelerated the growth of the install base. We believe that our browser services will further enhance our monetization capabilities in the coming years. In addition, benefiting from the rapid growth of mobile internet and smart phones, the monthly active user base of Kingsoft Mobile Security has recorded rapid growth to 40.7 million.

Benefiting from the government's continued push in IRP protection and our product innovation, revenue from Kingsoft WPS Office continued its strong growth momentum in 2012 and achieved a new record with sales in Mainland China and Japan exceeded RMB195.8 million. The monthly active users of WPS Personal Edition rose to over 43.3 million supported by the improved user experiences. We are more excited to see the global monthly active users of WPS Mobile Office exceeded 11.2 million in 2012. As the leading mobile office software with users in over 226 countries and regions, WPS Mobile Office supports 23 types of main document formats and 46 languages and took the top spot in Google Play in the business APPs category in 25 major countries and regions.

Kingsoft Cloud was established in early 2012 to capture the opportunities in cloud storage and computing services. In order to leverage the accelerated growth of mobile internet user base and smart devices in China, we established strategic collaborations with Xiaomi, Skyworth TV and AIGO in 2012. Xiaomi, invested into Kingsoft Cloud as a strategic partner, in November 2012, to allow Kingsoft Cloud to take advantage of Xiaomi phone's rapid growth to expand its storage services to mobile device users. Total registered users for Kingsoft Cloud expanded further and topped the list of the similar services.



Business Outlook - For the year ended December 31, 2012

Looking forward, JX Online III, as a leading domestic 3D MMO game, will continue the growth momentum as we continue to introduce new and improved gamer experiences. Ma La Jiang Hu, as a Q version of 3D role playing game, has enriched our 3D game portfolio and will be another growth catalyst of our online game in 2013. We expect that JXs and Ma La Jiang Hu will achieve doubledigit growth in terms of gaming revenue and APA in 2013. Two more MMO games: Jiutian Myth ( 九天神話), Doomsday Dragon ( 末日屠龍), a number of web games and mobile games are in the pipeline to be released in 2013. These focused investments will help us to capture the growth opportunities of web and mobile gaming markets in the coming years.

We would further grow our user base of Kingsoft Internet Security and Cheetah Browser through product innovation, improved user experiences, and strengthened collaboration with our strategic partners. We expect that revenue from advertising would keep strong momentum of growth, supported by the expanded user base of our internet security services and our browser. Revenue from web game operation is currently at its infant stage and is expected to be the next growth catalyst in 2013. Besides, Kingsoft Internet Security would invest heavily in mobile business and launch a series of mobile services in 2013, targeting at transforming itself into a mobile internet company.


In 2013, WPS Office will focus on growing enterprise business and new revenue sources. Also, WPS Office will further nurture the mobile user base worldwide with new functions, improved user experiences and expansion into new mobile platform. In February 2013, WPS Mobile Office for IOS was launched and received positive feedback.

Kingsoft will continue investing heavily in Kingsoft Cloud. In addition to personal data storage service, we will expand into enterprise data storage services and cloud storage platform services in 2013. The growth of user base of Kingsoft Cloud will accelerate in 2013 through product innovation and strategic collaboration with Xiaomi and smart TV producers. This will be a long term strategic investment and will better position us in the coming years.

Looking forward, we believe the top line of the Group would maintain a fast growth as we continue investing heavily in mobile internet business and cloud business. We are confi dent that, by focusing on product and service innovation, exceptional user experiences and future opportunities, we will deliver long term value to our shareholders.

Source: Kingsoft (03888) Annual Results Announcement
Chairman Jun LEI Issued Capital (shares) 1,178M
Par Value USD 0.0005 Market Capitalisation (HKD) 18,477M
 
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