Online gaming seems a strange match for seafood, but it’s buffering the income of China’s leading providers of seedlings and sea cucumbers, according to an analyst monitoring the firm.
Also a major seafood processor, Dalian Yiqiao Sea Cucumber Co. is reporting revenue of CNY 776 million (USD 113.5 million, EUR 101.2 million) in 2016, up 33.9 percent, while net profits were up 22.2 percent to CNY 304 million (USD 44.5 million, EUR 49.6 million).
Per-share income, at CNY 0.32 (USD 0.05, EUR 0.04), rose 23.08 percent year on year for 2016. This favorable performance for investors is down to a “diversification strategy” of developing and selling games for online gamers, who typically play on their phones, according to Ma Xian Wen, analyst and author of a report on the company compiled by Changjiang Securities, a leading Chinese brokerage.
The move to gaming – Yiqiao has partnerships with several IT companies – shows lack of confidence in recovery of sea cucumbers, a staple of China’s luxury seafood market and is part of a broader diversification strategy across the industry.
High customer retention and “stickability” of its online games is helping Yiqiao score an ARPU (average revenue per unit, a measure of earnings per subscriber) of CNY 209.83 (USD 30.68, EUR 27.35), high by the standards of the IT/gaming industry. But “continued growth is not guaranteed” said Ma Xian Wen, pointing to potential risks facing the firm. He has a “buy” on Yiqiao stock.
