CMGE (00302) issues profit warning, expecting a net loss of not more than 650 million yuan in the first half of the year.

CMGE (00302) announced that the group is expected to incur a net loss of no more than RMB 650 million for the six months ended June 30, 2025. The net loss for the six months ended June 30, 2024 was RMB 241 million. The announcement stated that the decline in performance is mainly due to the following factors: (1) Despite a significant increase in overseas business revenue during the reporting period compared to the same period in 2024, the performance of the group's self-developed flagship game "Chinese Paladin World" since its release in February 2025 did not meet expectations. Additionally, the income generated from mainland China for the six months ended June 30, 2025 decreased compared to the same period in 2024, leading to a decrease of approximately 40% in revenue for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. (2) Non-operating other expenses for the six months ended June 30, 2025 increased compared to the six months ended June 30, 2024, mainly due to the impairment loss of prepaid royalties for games not yet launched during the six months ended June 30, 2025, and an increase in fair value losses of financial assets recognized in profit or loss. (3) Sales and distribution expenses for the six months ended June 30, 2025 significantly increased, mainly due to the group's large-scale marketing and promotion of "Chinese Paladin World" and the generation of higher promotional expenses for games such as "Spring and Autumn Wonder" that were launched.