Zhejiang Century Huatong Group Co. Ltd: FY23 Report Overview

Founded in 2005, Zhejiang Century Huatong Group Co., Ltd. (ZCH) has evolved from its origins in auto parts manufacturing to become a diversified technology enterprise. ZCH’s current portfolio spans across several cutting-edge industries, including Internet games, artificial intelligence (AI) cloud data, brain science research, AI development, metaverse platform and application development, and strategic investments.

Initially focused on the auto parts business, ZCH embarked on a significant transformation in 2014 by acquiring Shengqu Games, marking its entry into the Internet gaming industry. This strategic pivot has positioned ZCH as a major player in the global gaming market. The company has formed strategic partnerships with industry giants such as NEXON, Square Enix, NCSoft, Bethesda, Bandai Namco, Sega, KlabGames, 4KB48 China, and CBird.

Regulatory Challenges

On July 25, 2023, ZCH received a “Notice of Case Filing” from the China Securities Regulatory Commission (CSRC). The company was suspected of violating information disclosure regulations, leading the CSRC to file a case against ZCH under the Securities Law and the Penalty Law. This development underscores the importance of compliance and transparency in maintaining investor trust.

Financial Performance in FY23

For the fiscal year 2023, ZCH reported net revenue of 13,284.553 million CNY, representing a 15.77% increase from 11,475.126 million CNY in FY22. This growth followed a decline of 17.62% in FY22 from 13,929.007 million CNY in FY21.

ZCH’s revenue in FY23 was primarily driven by domestic sales, which accounted for 53.97% of total revenue, amounting to 7,169.528 million CNY. The remaining 46.03% came from exports, totaling 6,115.025 million CNY.

ZCH’s ordinary shares are listed on the Shenzhen Stock Exchange under the ticker symbol 002602. As of December 31, 2023, the company had a total of 7,452,556,968 shares outstanding. Notably, ZCH did not pay dividends for the fiscal year 2023.

Revenue Structure by Business Segment

ZCH’s revenue in FY23 was derived from multiple segments:

• Mobile Games: 58.66% (7,793.087 million CNY)
• PC Games: 23.58% (3,132.960 million CNY)
• Car Parts: 11.86% (1,576.171 million CNY)
• Copper Rod Processing: 2.29% (304.761 million CNY)
• Web Games: 1.98% (263.074 million CNY)
• Other: 1.60% (212.402 million CNY)
• Cloud Data Services: 0.02% (2.098 million CNY)

As of December 31, 2023, ZCH’s total equity stood at 25,988.974 million CNY, marking a 2.53% increase compared to 25,348.637 million CNY as of December 31, 2022. The company’s total current assets amounted to 8,382.847 million CNY, significantly exceeding its total current liabilities of 6,186.198 million CNY by 2,196.649 million CNY.

The prospects

Zhejiang Century Huatong Group Co., Ltd. is a dynamic enterprise that has successfully transitioned from traditional manufacturing to become a leader in the digital technology space. Despite facing regulatory challenges, ZCH continues to show strong financial performance and is well-positioned to capitalize on its diverse business portfolio and global partnerships. The company’s commitment to innovation and digital transformation will likely play a crucial role in its future growth trajectory.