Disappointing First-Half Numbers From CMGE; but Upcoming Game Releases To Bring Back Growth

There were no surprises in CMGE Technology's first-half 2022 results because the group issued a profit warning on Aug. 15. The poor performance was mainly due to the Chinese government's temporary suspension of new game license approval in the first quarter. Since the resumption, CMGE has received one new license, and management expects more will come. CMGE currently holds four unpublished game licenses and expects to publish them all in the second half. This should lead to solid revenue growth for the next few quarters. We maintain our fair value estimate for no-moat CMGE at HKD 4.70 and view the shares as undervalued.