IGG (HK Listed) - A Company with Amazing Returns!

This post is a reminder for myself of why I invested in the above company. I am vested and comments maybe biased.


Amazing Returns in 2017 and 2018 – ROA are more than 45% and ROE are more than 65%! In addition, no comparison among competitors in terms of returns based on 2018 figures:

Feiyu Technology International Co Ltd (1022) - Loss making
Zynga Inc (ZNGA) - Loss making
Ourpalm (300315) - Loss making
Linekong Interactive Group Co Ltd (8267) - Loss making
Netmarble Games Corp (251270) - Super high PE + Low ROE/ROA
Colopl Inc (3668) - Super high PE + Low ROE/ROA
Digital Hollywood Interactive Ltd (2022) - Super high PE + Low ROE/ROA
NetDragon Websoft Inc (0777) - high PE + lower ROE/ROA
Boyaa Interactive International Ltd (0434) - Low ROE/ROA
FingerTango Inc (6860) - Listed 2 years… reasonable ROE/ROA
iDreamSky Technology Holdings Ltd (1119) - Listed 2 years… reasonable ROE/ROA
Zengame Technology Holding Ltd (2660) - Listing less than 1 year
NCsoft Corp (036570) - high PE + Reasonable ROE/ROA
Com2uS Corp (078340) - Worse off performance

Rovio Entertainment (ROVIO) - high PE + lower ROE/ROA

No Debts – Despite being labelled as a growth company and having such high profit, it does not have any debts!

Generating FCF – It has consistently generated FCF for the last 2 years.

DCF calculation – My own high discount, zero growth DCF allows me to come up with a US$0.931 per share (Do your own maths to convert to HK$). This is a very conservative figure!

PE and PFCF – Should be below 7. Very low for a growth company!

Piotroski F Score (Based FY2018) – 7

Business Model

Mobile Games Developer – They are a global mobile game developer. No other weird business going on. 

Attract Talent via Share Options – Looking through Glassdoor, they do not seem to pay too well. But they give LOTS of share options to their employees. Thus, this is how they attract and keep talent. Even with the share options, their number of shares have been going down over the years (to be elaborated under catalyst).


Share Buy Back – In 2018, they bought back 57 million shares for US$75mil in total. In 2019, they have been constantly buying back!

New Games – They just need 1 new massive hit title to break new highs. Recently they have been increasing their R&D cost, which is good. I do believe more innovation is required now more than ever in view of their stagnation of their revenue (to be elaborated in the Risk portion).

Mobile to PC – Recently they have released Lord Mobile to play on PC via download on stream. I do not believe the impact will be great, but it can still boost the revenue slightly. In addition, this provides the company an opportunity in future to create games for mobile as well as PC!


Concentration of revenue on Lord Mobile – 80% of the revenue comes from 1 game. If Lord Mobile losses its attraction, the company’s financial will be directly impacted. This has started to show in the interim 2019 figures. (On the other hand, being able to get so much revenue from 1 game that has been running since 2016 is truly amazing as well! If the management can just create another hit title with such amazing results!)

No Moat – In my opinion, there is no moat in such an industry. The rise and fall of a particular game can be fast, within months. Thus, it is important that the company consistently comes up with innovative games to attract new gamers.

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