Kaiser Culture stepped on a silent bomb

Zebra Consumer Ren Jianxin

Three years ago, secretly inflating profits has cost Caesar Culture a heavy price. The company's stock is now subject to other risk warnings, and several executives have been fined a total of 13 million yuan.

In the eyes of small and medium investors, the company really didn't need to commit financial fraud. Thinking they could deceive everyone, they never expected the truth to come out one day.

The company stated that it will rectify based on the final penalty decision, restate the 2021 financial report, and strive to remove the risk warning as soon as possible.

Another major issue is the company's continuous losses. How to return to normal operations as soon as possible is the most pressing problem.

Collective Fraud

After more than four months of investigation, the case of Caesar Culture 涉嫌信披违法违规 has finally concluded.

Yesterday, the company announced that it received the "Administrative Penalty Prior Notice," and the Shenzhen Stock Exchange will impose other risk warnings on its stock. The company's stock was suspended for one day starting yesterday and resumed trading today, with the stock abbreviation changed to ST Kaiwen (002425.SZ).

This mess dates back three years.

In 2021, to reduce bad debt losses from receivables, Caesar Culture came up with a shady plan. During business dealings with suppliers, funds were transferred from the company or subsidiaries through suppliers to designated clients, who then returned the funds as instructed to offset receivables.

As a result, the company underreported bad debt provisions by approximately 15.2467 million yuan in 2021, inflating profits by about 15.2467 million yuan, accounting for 15.55% of the total profits disclosed for the period.

On April 30 this year, the China Securities Regulatory Commission (CSRC) formally 立案调查 the company for 涉嫌信披违法违规. The investigation revealed that several core executives were aware of the false repayment of receivables.

Recently, the CSRC issued its penalty decision. The company was ordered to make corrections and fined 4 million yuan; former chairman Zheng Heming and former director and vice president 孔德坚 were given warnings and fined 2.5 million yuan each, while other executives were fined varying amounts, totaling 13 million yuan.

Continuous Losses

Caesar Culture is a star company in China's 泛娱乐 sector, owning 经典 IP 手游 products such as "Saint Seiya: Rebirth," "Three Kingdoms 2017," and "New Chinese Paladin," as well as self-developed 手游 products like "Tangmen World" and "Peerless Talent" based on online novels.

However, despite these star game products, the company's performance has not peaked but instead weakened year after year. From 2022 to 2023, the company's 营业收入 were 621 million yuan and 431 million yuan, respectively, with 归母净利润 losses of 656 million yuan and 795 million yuan.

In the first half of this year, the situation improved slightly, with 营业收入 reaching 239 million yuan, a 33.89% year-on-year increase, and 归母净利润 losses narrowing to 46.6747 million yuan, a 51.69% year-on-year reduction.

In terms of 收入结构， the company's game revenue was 233 million yuan, up 34.94% year-on-year, accounting for 97.68% of total revenue. Revenue mainly came from subsidiaries like Cool Cow Interactive and Tian Shang You Jia, with mobile online games being the primary type.

The improvement in performance is likely due to the launch of new game products. In this year's 半年度报告， the company 特别提及 that the 手游 product "Battle Rules" topped the App Store free chart in its first month, contributing positively to 上半年收入。

Additionally, the company's 研发及联合发行的 "Saint Seiya: Rebirth 2" launched in mid-August，当天曾拿下 App Store free 总榜 and 游戏免费榜第一的纪录。

Saint Seiya is a classic IP beloved by the post-80s and post-90s generations. As early as 2016, the company launched "Saint Seiya: Rebirth," and after eight years of operation, it released "Saint Seiya: Rebirth 2" to 延续辉煌战绩。

Besides "Saint Seiya: Rebirth 2," Caesar Culture will also launch products like "All-Star Awakening," "Zhen Hun Street: Dawn," and "Yu Yu Hakusho: Destiny Awakening" in the second half of the year, which are expected to bring significant business growth and revenue contributions.

Second-Generation Succession

In May 2022, Caesar Culture founder Zheng Heming resigned as chairman and other positions due to health reasons, passing the reins to his daughter Zheng Yashan to complete the 家族 "inheritance." At the time, whether Zheng Yashan had the industry experience or educational background to steer Caesar Culture was widely questioned.

Caesar Culture started as a small fur factory founded by Zheng Heming in the 1980s. In 1994, he established Caesar Limited in Shantou, Guangdong, focusing on 服装加工. Perhaps for this reason, Zheng Yashan traveled far to study fashion design.

In 2010, the company successfully listed on the Shenzhen Stock Exchange. Zheng Yashan completed her studies at Central Saint Martins College of Art and Design in London in 2009 and returned to China to work at Guangzhou Caesar Fashion Design Co., Ltd., holding positions such as market planning manager.

In 2015, the company acquired Shenzhen Cool Cow Interactive, officially entering the 游戏互联网 industry. By then, Zheng Yashan was already a director and vice president of the company.

Typically, when a second-generation successor takes over, they are rotated through various roles to 熟悉业务， and after the founder steps down, seasoned executives are 安排辅佐。

Zheng Heming's sudden resignation led to the appointment of capable executive He Xiaowei to assist his daughter.

In the gaming industry, He Xiaowei, born in 1974, is an expert. In 2002, he founded Chengdu Yihai Qingtian Network and developed "Heroes of the Sea." Six years later, under Sichuan Tian Shang You Jia, he launched products like "New Chinese Paladin 3D," "Saint Seiya: Rebirth," and "Three Kingdoms 2017."

Zheng Yashan does not directly hold shares in Caesar Culture. As of the end of June this year, Zheng Heming and his wife Chen Yuqin held 19.59% of the company's shares through Caesar Group (Hong Kong), making them the 实际控制人。