Marbridge Daily

<- December 08, 2011 ->

Sunity Re-Files Nasdaq IPO Prospectus

SEC, 12/07/11

Xi'an-based online game developer and operator Sunity Online Entertainment today re-filed its IPO prospectus to offer 1 mln to 1.6 mln American Depositary Shares (ADSs) at an initial price of USD 5 per share on the Nasdaq Global Market under the ticker symbol "SUNG" to raise up to USD 8 mln. Sunity plans to use funds raised to expand R&D efforts, increase sales and marketing of its new browser game platform, expand and diversify its game portfolio through strategic acquisitions, expand its animation center in Shanghai to develop a 3D browser game, and raise working capital.

Sunity estimates net revenues for the quarter ended June 30, 2011 to be approximately USD 2.83 mln. This represents an increase of approximately 7.5% from revenues of USD 2.63 mln for the quarter ended June 30, 2010, primarily driven by new games and a new game operations platform, as well as the impact of business tax incentives. Revenue for the fiscal years ended March 31, 2011, 2010 and 2009 was USD 12.38 mln, USD 9.54 mln, and USD 8.25 mln, respectively.

Net income for the fiscal years ended March 31, 2011, 2010 and 2009 was USD 4.86 mln, USD 3.89 mln and USD 2.87 mln, respectively, representing an increase in net income of 25% YoY and 35% YoY in each of the years ended March 31, 2011 and 2010, respectively.

In 2007, Sunity began transitioning its core business from wireless value-added service (WVAS) provider (SP) to casual game operator. SMS-based payment service (i.e. a type of WVAS) is one of the payment methods that players use to purchase game tokens.

For the year ended March 31, 2011, revenue from game operations reached USD 10.64 mln, while SP revenue was USD 688,608, revenue from software development was USD 1.05 mln, and revenue from the platform was USD 9,968.

Sunity's product line includes three self-developed free-to-play browser games Han Dynasty (launched October 2009), Happy Canyon (launched September 2010), and In Search of the Supernatural, all hosted on its website, and pay-to-play card and chess channel Qihang (launched May 2008). Sunity is also developing two browser games, Immortal Navigator and Space War, which will begin open beta testing in December 2011 and February 2012 respectively.

In 2011, average concurrent users (ACU) and peak concurrent users (PCU) for Qihang reached 10.05 mln and 11.83 mln respectively, while Happy Canyon recorded 1.81 mln ACU and 2.42 mln PCU and Han Dynasty recorded 39.8 mln ACU and 50.13 mln PCU. In 2010, Qihang had 11.28 mln ACU and 14.33 mln PCU, and Han Dynasty had 14.92 mln ACU and 18.89 mln PCU. Qihang had 6 mln ACU and 7.51 mln PCU in 2009.

Editor's Note: To view Sunity's full IPO prospectus, please click here. For more information on this topic, please see "Chinese Game Operator Sunity to IPO on Nasdaq," MD 9/28/10 issue.

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