Tue, Jul 23, 2019 - Page 11 News List

Softstar surges as Chinese regulator approves game

By Natasha Li  /  Staff reporter

Video game developer Softstar Entertainment Inc (大宇資訊) yesterday saw its shares rise 9.44 percent as it announced that an addition to its Xuan-Yuan Sword series, The Dragon Dances Among Clouds and Mountains (軒轅劍龍舞雲山) was approved by the Chinese State Administration of Press and Publications.

The stock’s rise outperformed the TAIEX, which rose 0.66 percent to 10,944.53 points, its highest close in two months.

The Chinese regulator issued the approval on Friday, Softstar said in a statement, adding that the mobile game was developed with Netease Inc (網易), China’s second-largest video game publisher.

Development fees for the game reached 200 million yuan (US$29.07 million).

“We hope to hit the Chinese market with the [released] game before the end of the year,” a Softstar official surnamed Chen (陳) told the Taipei Times by telephone, adding that it was released in Taiwan in March and the approval process in China lasted more than a year.

The company in April posted a net loss of NT$38 million (US$1.22 million), which it blamed on high advertising costs related to the game’s launch in Taiwan, the Chinese-language news site Cnyes.com reported.

The company posted a net loss of NT$54 million for May and has yet to release its bottom line figure for last month.

Despite the losses, analysts expect earnings per share to reach NT$13 in the second quarter of this year, as Softstar has sold a 51 percent stake in its Softstar Technology (Beijing) Co (北京軟星) unit to China Mobile Games and Entertainment Group (CMGE, 中國手遊) for 213 million yuan, Cnyes.com reported.

Softstar declined to comment on the report.

The company said it would this week start beta testing of another mobile game, Xuan Yuan Sword Luminary (軒轅劍蒼之曜), which is based on an animated series under the same name codeveloped by its Softstar Technology (Shanghai) Co (上海軟星) unit.

“We plan to release another two to three games in the upcoming months,” Chen said, echoing Softstar chairman David Tu’s (?俊光) remarks at the company’s annual shareholders’ meeting last month.

The company would release The Legend of Sword and Fairy 4 and 7 (仙劍奇俠傳四,七) in Taiwan and China, Chen said, adding that it would be managed by Tencent Holdings Ltd (騰訊) and Richman 10 (大富翁十).

Separately, even with the benchmark TAIEX near a record high, fund managers have pulled about US$680 million from Taiwanese stock funds this month, Bloomberg News reported yesterday.

Investors who leaped into Taiwan stocks earlier this year are not eager to do it again, Bloomberg said, adding that Taiwanese companies are so entwined with the global technology supply chain that they have been particularly vulnerable to the US-China trade dispute and a slowdown in the smartphone market.

“High dividend yields make Taiwan stocks attractive to global investors in a low interest rate environment, but it’s only one of the elements to consider,” Agnes Lin (林雅慧), a global market strategist at JPMorgan Asset Management Taiwan Ltd (摩根投信), told Bloomberg.

The nation’s weak economic fundamentals, partly the result of the trade clash, are also turning investors off equities, she said.

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