My Thoughts on XD Part 4 (XIRR Update)

 

Please click and read this disclaimer if you wish to continue with the contents below.

On April 1st, Bilibili(HK:9626) announced the strategic investment of approximately HK$960 million in Xindong Company in the second week of its secondary listing in Hong Kong. The two parties will establish a cooperative relationship in the game field.

According to the agreement, Bilibili will subscribe for 22,660,000 ordinary shares issued by Xindong Company at a price of HK$42.38 per share, with a total subscription price of approximately HK$960 million. After the transaction is completed, Bilibili will hold approximately 4.72% of Xindong's equity. At today's close, Xindong's share price rose 22.34% to 57.5 Hong Kong dollars.

XD now has ByteDance, Mihayou, Lilith, Bilibili, Alibaba as strategic shareholders, except Tencent and NetEase. This means that the up and coming mobile gaming companies are trying to use TapTap platform ecology to subvert the top two gaming giants in China?

The core of the cooperation between Bilibili and Xindong Company lies in the complementary advantages of both parties. The good two-dimensional atmosphere of Bilibili is the main reason for the growth of its two-dimensional game track, and Xindong's unique TapTap game community model which consist of channels, R&D, and game ecology can all benefit the game business of Bilibili. The TapTap game sharing community is known as the "Douban" of the game industry. Unlike the traditional channel intermodal sharing model, TapTap has become a unique channel for the domestic Android market due to its zero-sharing model, attracting many game developers to cooperate with it.

Xindong is a game company focusing on the two core businesses of game development and distribution and TapTap game community information services. Xindong Company announced today that it will issue a total of US$280 million in 5-year convertible bonds, and at the same time carry out an allotment of approximately HK$1.115 billion (approximately US$140 million) of new shares, raising a total of approximately US$420 million. It seems like Huang Yimeng is trying to expand the company aggressively and even letting its competitor(Bilibili) invest to form strategic win win partnership. This kind of fund raising and R&D push is similar to how Meituan rose from ambiguity. 

The company’s placement shares include two companies, Bilibili and Taobao China. After the placement is completed, Bilibili will subscribe for 22.66 million shares, involving an investment of 960 million Hong Kong dollars, and holding 4.72% of the shares. Taobao China will subscribe for 3.658 million shares, involving capital. 155 million Hong Kong dollars, holding 0.76% of the shares.

Taobao's small stake is a bit puzzling. Maybe Alibaba is trying to find new ways to subvert Tencent strong gaming lead via Tap Tap platform ecology. Taobao has a massive platform ecology too via their ecommerce app, although its of a different segment, a synergistic MAU exchange potential might happen in the future? Have to wait and see.

Xindong Company has well-known game IPs such as "Ragnarok Ro" and "Sausage Party", and its cartoon game style is consistent with the strategy of Bilibili to develop two-dimensional games. In addition, the core asset of Xindong Company is the TapTap community, which is also the most attractive place for Bilibili. The similarity of user operation concepts and the complementarity of game distribution channels between the two parties have promoted the completion of this cooperation.

Although the game business has always seen some explosive products in the industry, with the passage of time, the market share is still in the hands of Tencent and NetEase. However, diversified companies are subject to business limitations and need to expand emerging user groups to promote corporate growth. And the high degree of overlap between the young user groups at the core of Bilibili and the game groups may have new opportunities.

The TapTap model, which is different from the traditional application store channels, is increasingly favored by institutions. At a time when traffic costs are becoming increasingly high, the scarcity value of Xindong, which has a variety of new game tests and has a zero-share game platform TapTap, is more preferred.

Xindong's self-developed games have strong internal growth momentum. At the same time, TapTap, as a scarce mobile game distribution platform, has a high valuation premium basis. It should be noted that Xindong has soared by 144% from the beginning of this year to the peak of February 16, and its share price soared to 114.5 Hong Kong dollars. After that, it fell all the way down and even cut in half. I believe strong conviction is needed to fully realize its potential.

The attraction of the well-known game IPs of Xindong Company to Bilibili also reveals to a certain extent that Bilibili is aiming to reduce the overall proportion of games in the company's revenue. I think more patience is needed to see how XD especially its core Tap Tap platform can evolve over time.

Full disclosure, I have vested interest in this stock and I'm currently up 60.52%

Snap shot of my portfolio performance as of today: Total profit for 2021: S$53,869.30 


 

3 comments :

  1. Do you need Personal Finance?
    Business Cash Finance?
    Unsecured Finance
    Fast and Simple Finance?
    Quick Application Process?
    Finance. Services Rendered include,
    *Debt Consolidation Finance
    *Business Finance Services
    *Personal Finance services Help
    contact us today and get the best lending service
    personal cash business cash just email us below
    Contact Us: financialserviceoffer876@gmail.com
    call or add us on what's app +918929509036

    ReplyDelete



  2. Are you willing to know who your spouse really is, if your spouse is cheating just contact cybergoldenhacker he is good at hacking into cell phones,changing school grades and many more this great hacker has also worked for me and i got results of spouse whats-app messages,call logs, text messages, viber,kik, Facebook, emails. deleted text messages and many more this hacker is very fast cheap and affordable he has never disappointed me for once contact him if you have any form of hacking problem am sure he will help you THANK YOU.
    contact: cybergoldenhacker at gmail dot com

    ReplyDelete
  3. Online Casino | Kadangpintar
    Online Casino 【 playcasinos onlinecasino.com】 【 playcasinos onlinecasino.com】 【 playcasinos onlinecasino.com】 】 온카지노 커뮤니티 【 playcasinos onlinecasino.com】 】 【 playcasinos onlinecasino.com】

    ReplyDelete