Photo: Duc Anh
Leading games provider and publisher announces move at recent shareholders meeting.
VNG Corporation, the leading games provider and publisher in Vietnam, has suddenly announced it will expand into other sectors such as manufacturing electronic components and retailing electronics and household electrical appliances.
The move was announced at its shareholders meeting on June 30 and it is also looking into retailing household items such as beds, wardrobes, furniture, and lamps.
VNG targets revenue of VND2.6 trillion ($115 million) this year, a 23 per cent increase year-on-year, with pre-tax profit of VND361 billion ($16 million), up 16 per cent.
At the shareholders meeting it proposed not paying a dividend due to its plans to reinvest in strategic products. Last year it recorded revenue of nearly VND2.1 trillion ($93.3 million) and posted an after-tax profit of VND231 billion ($10.2 million). The profit primarily came from investments in associated companies, while profit from its core business of games showed signs of slowing down.
Revenue in its core business stood at VND1.6 trillion ($72 million) in 2015, up 8.2 per cent year-on-year but its profit was down VND11 billion ($495,000).
The development of social networking and free games has presented problems for many games providers and publishers. VNG is now promoting online entertainment on the digital platform.
Mr. Le Hong Minh, CEO of VNG, was previously entangled in a scandal relating to corporate debt. He borrowed VND251 billion ($11.2 million) from VNG at an interest rate of 4.2 per cent per year. His interest payments had totaled VND20 billion ($900,000) by the end of 2015.
When asked by VET about the issue, Mr. Ho Minh Tu, Manager of the External Relations Department, declined to comment.
In mid-May last year VNG also announced its acquisition of a 38 per cent stake (3,716,187 shares) in the Ti Ki JSC, the managing unit of the Tiki.vn e-commerce sites, for VND383 billion ($17 million).
VNG is the No. 1 games provider and publisher in Vietnam and was established in 2004. Charter capital stands at VND324 billion ($14.4 million) and total assets VND2.7 trillion ($120 million). It mainly imports games from China and South Korea, but in recent years has invested in the research and production of games under its own brand. It now also manages the aggregated news site Zing.vn.