China Mobile Games and Entertainment Group Limited (stock code: 019283746565748392) issues a profit warning; it is expected that by 2025, the net loss will narrow year-over-year to no more than 1.5 billion yuan.

China Mobile Games and Entertainment Group Limited (00302) announced that the Group expects to record a net loss of no more than RMB 1.5 billion for the year ending December 31, 2025. The Group’s net loss for the year ending December 31, 2024, is approximately RMB 2.1 billion.

The improvement in the Group’s performance is mainly due to a decrease in non-operating other expenses from about RMB 1.7 billion for the year ending December 31, 2024, to approximately RMB 1.1 billion for the year ending December 31, 2025, primarily due to the following factors: (i) It is expected that the goodwill impairment of the cash-generating unit under the Group’s subsidiary Beijing Wenmai Interactive Technology Co., Ltd. (Wenmai Interactive) will significantly decrease for the year ending December 31, 2025, compared to the year ending December 31, 2024. As of December 31, 2024, the impairment forecast for Wenmai Interactive’s cash-generating unit used a significantly reduced revenue growth rate of 2%-157% (compared to 16%-213% as of December 31, 2023), based on actual revenue amounts for the relevant fiscal year and projected annual revenue over the next five years, resulting in a substantial impairment of goodwill for the cash-generating unit as of December 31, 2024; (ii) Although the amortization of prepayments increased for the year ending December 31, 2025, the impairment of other intangible assets (such as intellectual property rights licensing (IP licensing), content provider licensing (CP licensing), and R&D expenses) decreased, which is expected to offset the overall asset impairment; and (iii) The fair value loss on financial assets measured at fair value through profit or loss is expected to decrease for the year ending December 31, 2025. The Group recognized fair value losses on certain investees facing operational difficulties, resulting in significant fair value losses during the year ending December 31, 2024. Additionally, the investment environment improved during the year ending December 31, 2025, which also reduced the fair value losses on the Group’s financial assets measured at fair value.

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