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Can Firerock Holdings (1909. HK) Can -2-

09/17/2021 | 06:24am EDT

According to the company's latest announcement, FireRock has established a wholly-owned company in Turkey, and plans to launch new games in Turkey in Q4 this year, while copying the reward points platform service in Thailand.

On the whole, the author believes that FireRock is in the early stage of its trading ecology. 1) Relying on the company's traditional game business to gather basic user traffic. At the same time, as a high-flow and high-margin business, games have also accumulated funds for the company's technical investment in the construction of the trading ecosystem and expansion of payment scenarios; 2) Thailand's reward points platform is expected to become an important benchmark project for the company, and it will be more in the future. Offline suppliers cooperate to provide users with payment scenarios to help users realize the value of online games; 3) The advancement of NFT technology and the cooperation with FOMO Pay will enrich the basic payment capabilities of the igneous transaction ecosystem.

Sea's growth path may be worth learning.

Sea is currently one of the world's most watched Internet companies, and is ambitiously embarking on its path to global expansion, with businesses covering games, e-commerce and digital payments.

Looking back on its growth process, gaming is the core business it started. By obtaining the exclusive agency rights of Tencent Games in Southeast Asia, Sea quickly accumulated its first pot of gold and initial traffic through game publishing; in 2014, Sea launched AirPay in Vietnam Entered the digital financial sector, which is the predecessor of the three major business sectors SeaMoney; in 2015, Sea established Shopee and officially entered the e-commerce field. Relying on its in-depth understanding of local users and the benefits of accelerating local Internet penetration, Sea has gradually grown into an Internet complex of games + e-commerce + payment.

Specifically, before 2020, the game business will account for the largest proportion of Sea's revenue. Games provide Sea with a stable cash flow, enabling the company to support the long-term and healthy development of e-commerce and payment businesses. By 2020, e-commerce has become Sea's largest revenue contributor, but in terms of profit, the position of games is still significant. According to the company's announcement, in 2020, Sea's game, e-commerce, and payment businesses accounted for 46.1%, 49.5%, and 1.3% respectively; and the adjusted EBITDA of the three were 19.8,

-13.1, and -510 million U.S. dollars, respectively.

The author believes that games often play an important role in the development of Internet complexes due to their high-flow business characteristics. Internet business is inseparable from traffic. First, the acquisition of traffic is direct purchase, and the other is product attraction. Games happen to be able to obtain a stable flow of funds while attracting user growth. This is why domestic platform companies such as Ali, Byte, and Bilibili spare no effort to develop the game business.

Therefore, with the strong support of the game business, Sea has the ability to successfully capture the dividends of the Internet development in Southeast Asia, expand into e-commerce and payment businesses, and create the current situation of coordinated development of games + e-commerce + payment. However, since the e-commerce business needs to continue to exert efforts in the early stage of logistics, warehousing and other infrastructure, as well as the medium and long tail traffic, it is a typical asset-heavy business in the Internet industry and needs to experience a long payback period and long-term loss. According to Sea's 2021 Q2 financial report, the company is still at a loss in Q2, and with its plans to expand into the European market, it will inevitably put further financial pressure on it.

Back to FireRock, the company's game business has grown steadily and has gradually entered a stage of large-scale growth, becoming an important source of its initial flow and cash flow. In terms of flow, FireRock has accumulated more than 1 million high-value users worldwide. On this basis, FireRock has established NFT asset capabilities through the NFT technology layout; and strategic cooperation with FOMO, has helped FireRock open up the settlement end of digital assets and legal currency.

The author would like to particularly emphasize that NFT assets are different from e-commerce businesses, they are virtual assets and do not require large-scale investment in offline infrastructure, so the business form is lighter. This means that once FireRock's NFT asset trading enters the stage of large-scale, it can quickly generate profitability and directly contribute to the company's performance.

At the same time, the author believes that the company's management team headed by Tencent veteran Zhang Yan (former CEO of the founder and CEO of Wangyu), the chairman of FireRock Holdings, has been deeply involved in the Internet industry for many years and has rich experience. It is optimistic that FireRock will grasp the rapid development trend of NFT digital asset transactions under the leadership of the management, and successfully build a next-generation game + payment + NFT asset transaction complex, and broaden the company's revenue and profit channels.

Bloomberg also stated in its recent article that the new market and the emerging digital economy will provide growth momentum for FireRock in the next decade, and Fire Rock is expected to become another potential stock in the technology sector besides Sea.

17/09/2021 Dissemination of a Marketing Press Release, transmitted by EQS Group. The issuer is solely responsible for the content of this announcement. Media archive at www.todayir.com

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(END) Dow Jones Newswires

September 17, 2021 06:23 ET (10:23 GMT)

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