Intrinsic Value Ourgame International Holdings Limited (6899.HK)

• Previous Close: HK$0.22
• Intrinsic Value: HK$28.88
• Upside potential: +13,027%

Stock Valuation Context

Business Model And Market Position

Ourgame International Holdings Limited operates as a specialized online gaming company focused on card and board games, serving markets primarily in China and internationally. The company generates revenue through a multi-platform distribution model encompassing PC client portals like Ourgame Hall, mobile games via third-party channels for Android and iOS, and web games through its owned websites. Its core business involves developing, licensing, and operating games while providing ongoing technical support, anti-cheating services, and hosting mind-sports events. Operating through Lianzhong Group and AESE Group segments, Ourgame maintains a niche position in the competitive Chinese online gaming sector by focusing on traditional card and board game formats rather than pursuing mass-market AAA titles. The company leverages its established Ourgame Hall platform to create an integrated gaming ecosystem that combines game distribution with community features and tournament organization. This specialized approach allows Ourgame to cater to specific gaming demographics while competing with larger gaming conglomerates through focused content and community engagement strategies within the broader electronic gaming and multimedia industry.

Revenue Profitability And Efficiency

The company reported revenue of HKD 217.7 million for FY2022 but experienced a net loss of HKD 29.6 million, indicating profitability challenges. Operating cash flow was negative HKD 81.9 million, suggesting operational inefficiencies or timing differences in cash collection. The negative earnings per diluted share of HKD -0.0276 reflects the company's current unprofitability despite generating substantial revenue in the competitive gaming market.

Earnings Power And Capital Efficiency

Ourgame's negative net income and operating cash flow demonstrate weak earnings power in the current period. The company's capital expenditures of HKD 3.4 million represent a modest investment in maintaining and developing its gaming platforms. The negative cash flow from operations relative to revenue indicates potential challenges in converting sales into cash, possibly due to the competitive nature of the gaming industry or specific operational issues.

Balance Sheet And Financial Health

The company maintains HKD 87.3 million in cash and equivalents against total debt of HKD 59.7 million, providing some liquidity buffer. However, the negative operating cash flow raises concerns about medium-term financial sustainability. The balance sheet structure suggests the company has adequate short-term liquidity but may face pressure if operational performance doesn't improve.

Growth Trends And Dividend Policy

No dividend payments were made in FY2022, consistent with the company's loss-making position. The financial results indicate challenging growth conditions in the competitive online gaming market. The company's focus appears to be on sustaining operations rather than shareholder returns, with resources directed toward maintaining market position in its niche gaming segments.

Valuation And Market Expectations

With a market capitalization of approximately HKD 201 million, the market values the company at slightly below its annual revenue. The beta of 0.69 suggests lower volatility than the broader market, possibly reflecting the company's niche positioning. Current valuation metrics appear to incorporate expectations of continued challenges in the competitive gaming landscape.

Strategic Advantages And Outlook

Ourgame's specialized focus on card and board games provides differentiation in a crowded market, though execution challenges are evident. The company's integrated platform approach and event organization capabilities represent potential strengths. However, the negative financial metrics suggest urgent need for operational improvements and possibly strategic repositioning to achieve sustainable profitability in the evolving gaming industry.

Sources

Company annual reportHong Kong Stock Exchange filingsFinancial data providers