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the father resigned after committing fraud, and the company was filed for investigation after his daughter took over. this dramatic scene is happening recently at caesar culture (002425.sz).

recently,gaming industry giant caesars entertainment's 2021 financial fraud case exposed, the guangdong regulatory bureau of the china securities regulatory commission issued a "preliminary notice of administrative penalty" to it.a total of 13 million yuan in fines were issued to the company's founder, then-chairman zheng heming, six other executives, and caesar culture.。

in addition, the shenzhen stock exchange has implemented an "other risk warning" for caesar culture since september 19, and the stock name has been changed to "st kevin", and the daily limit on the rise and fall of the stock has been changed from 10% to 5%. on the same day, caesar culture's stock was also removed from the list of securities subject to margin trading.

the actual controllers of caesar culture are zheng heming and chen yuqin. in 2022, zheng heming resigned from his positions as chairman and other positions due to health reasons. his daughter zheng yashan then took over as chairman, but the company has suffered continuous losses since taking over.public information shows that zheng yashan was born in 1986, is 38 years old this year, and belongs to the “post-80s” generation.

as of the close of september 20, st kevin's share price was 2.39 yuan per share. after falling 4.91% on september 19, it fell another 5.16%, leaving its market value at only 2.286 billion yuan.st kevin's historical stock price peaked at 22.69 yuan per share. the current price of 2.39 yuan per share is equivalent to a drop of nearly 90%.。

now, her father’s “fraud case” three years ago has been exposed and the company has been fined. can his daughter zheng yashan lead caesar culture to turn losses into profits and regain the trust of the market?

founder zheng he knowingly committed fraud

according to "jiemian news", as early as april this year, caesar culture received a "notice of case filing" issued by the china securities regulatory commission. because the company was suspected of violating laws and regulations on information disclosure, the china securities regulatory commission decided to initiate an investigation into it.

on september 13, caesar culture received the "administrative penalty advance notice" issued by the guangdong regulatory bureau of the china securities regulatory commission, which showed thatin order to reduce bad debt losses of accounts receivable, caesar culture transfers funds from the company or its subsidiaries to designated customers via suppliers in the course of doing business with suppliers, and the relevant customers repay the company or its subsidiaries as required.

caesar culture will use the received funds to offset accounts receivable, and will under-provision for bad debts by approximately rmb 15.2467 million in 2021, inflating profits by rmb 15.2467 million, accounting for 15.55% of the total disclosed profits for the period.

source: company announcement

the "administrative penalty advance notice" also mentioned thatzheng heming, the then chairman, knew about and allowed caesar culture to use its own funds to falsely collect accounts receivable.kong dejian, who was the director and deputy general manager at the time, organized relevant personnel and participated in the implementation of using their own funds to make false repayments of accounts receivable. the two were the directly responsible supervisors for the above-mentioned illegal and irregular information disclosure.

he xiaowei, then director and general manager, liu jun, then financial director, peng ling, then secretary of the board of directors, and ma hanjie, then independent director and chairman of the audit committee, failed to perform their duties diligently and are other directly responsible persons for the above-mentioned information disclosure violations.

the above-mentioned actions of caesar culture resulted in false statements in its 2021 annual report, and are suspected of violating the securities law of the people's republic of china (hereinafter referred to as the "securities law").

pursuant to the provisions of article 197, paragraph 2 of the securities law,zheng heming, kong dejian, he xiaowei, liu jun, peng ling and ma hanjie were given warnings and fined a total of 9 million yuanin addition, caesar culture was given a warning and fined 4 million yuan.

according to the relevant regulations of the shenzhen stock exchange, if caesar culture wants to revoke the "other risk warning", it must meet two major conditions at the same time: one is to retrospectively restate the annual financial accounting report that contains financial fraud, and the other is that twelve months have passed since the china securities regulatory commission issued the administrative penalty decision.

source: canned food gallery

caesar culture was founded in 1994 and listed on the china a-share market in 2010. its founder is zheng heming. caesar culture has been developing for 27 years. the global operation of the pan-entertainment industry is the main strategy of caesar culture. its business covers china, japan, singapore, malaysia, thailand and other asia-pacific regions.

caesar culture once described itself as "reputable and well-known" in its official website introduction. but now that its financial fraud has been exposed, this introduction is hard to agree with.

lawyer zang xiaoli from beijing shize law firm analyzed thatin view of the above-mentioned illegal behavior of inflating profits, the injured investors can file a claim lawsuit against caesar culture and relevant responsible persons., demanding compensation for investment losses. the range of investors who are expected to receive compensation are: anyone who bought caesar culture shares (002425.sz) between april 27, 2022 and may 5, 2024, and still held shares at the close of may 5, 2024. the final determination will be based on the court's judgment.

the daughter took over the business and suffered a loss of 1.4 billion in two years.can the new “city of the dead” work take on the leading role?

the company falsely inflated its profits by approximately rmb 15.2467 million, and was fined a total of rmb 13 million after the incident. why did caesar culture go to such great lengths to commit fraud?

the "administrative penalty advance notice" did not reveal caesar culture's motive for financial fraud, but the company's announcement showed that caesar culture issued nearly 143 million shares in a private placement to 28 investors at a price of 6.3 yuan per share in march 2021.the funds raised were approximately rmb 900 million, which will be mainly used for game development and operation construction projects, overseas game distribution agency projects and to supplement working capital.。

comparing historical financial data, it can be found that 2021 was the year with the highest revenue for caesar culture, reaching about 933 million yuan, but the net profit was only 81.5111 million yuan, a year-on-year decrease of 33.91%, and this was achieved on the basis of inflated profits. in 2020, caesar culture's operating income was 590 million yuan and its net profit was 123 million yuan.

in fact, from 2017 to 2019, caesar culture's net profit performance was very good. in 2017, the net profit was about 250 million yuan, exceeding 200 million yuan for the first time, a year-on-year increase of 67.42%. the net profits in 2018 and 2019 were also above 200 million yuan.

butstarting from 2019, caesar culture's net profit began to decline year-on-year, and the downward trend continued until 2023.from 2022 to 2023, caesar culture's net profit will still be in the red.the total loss in the two years was about 1.45 billion yuan, and the total net profit from 2017 to 2021 was only about 940 million yuan.

source: eastmoney.com

in the past few years when profits have been declining and losses have occurred, caesar culture has not produced many "masterpieces".

caesar culture is a well-known domestic gaming industry giant. its stock is also known as the core leading stock in cloud gaming. its main business is to engage in mobile game research and development and distribution, animation production and investment, film and television production and investment, and internet cultural industry investment through signing high-quality ips. it is a well-known pan-entertainment company in china.

according to its official website, caesar culture has won the rights to adapt multiple high-quality ips into games, animations, and films, but most of these high-quality ips became popular before 2018. among the big ips after 2018, caesar culture did not highlight them on its official website.

caesar culture’s representative mobile game "saint seiya: rebirth" was released in 2016, and "romance of the three kingdoms 2017" was released in 2017, which is 7 to 8 years ago. it is still the main force among caesar culture’s old mobile game products.

however, the official website introduced that "once upon a time there was a spirit sword mountain", "the princess weiyoung", "silver tomb keeper" and "fairy tail" launched in 2018 did not appear on the app store of apple mobile phones; in addition, the animation invested by caesar culture such as "young imperial guards" and "gate of the mysterious world" were also works before 2018.

regarding the development of new works, according to caesar culture’s 2024 first-half financial report, mobile games such as "city of revenge: dawn", "saint seiya: rebirth 2", and "yu yu hakusho: fate awakening" will be launched in the second half of 2024.

coincidentally, the day caesar culture was delisted on september 19 was also the day when "celestial city: dawn" was publicly tested. "celestial city" is one of the major ips that caesar culture has won the adaptation rights for in recent years.

source: game screenshots

according to its official website, the work was created by xu chen and has received over 4.1 billion hits since its serialization. it is one of the most popular animation works in china. caesar culture has the rights to adapt "city of the dead" into a mobile game.

caesar culture attaches great importance to "soul land: dawn". the company said,looking forward to "soul land: dawn"“effectively increase the company's operating performance, once again verifying the company's solid self-developed capabilities and boutique strategy. "but on the day of the game's public beta, the company's stock was "st", which was not good news for the public beta of "soul land: dawn".

on the tap tap rankings, "soul land: dawn" ranks seventh on the android game popular list, not in the top 50 of the hot list, and ranks tenth on the ios game popular list.tap tap data shows that after the public beta of "soul land: dawn" yesterday, the number of downloads was 96,000, but the overall rating was 6.1 points, which is considered average.

some players believe that as a card game, the "combined attack" gameplay of this game is relatively novel, while other players believe that "soul land: dawn" has serious krypton gold inducement and poor picture quality.

source: game screenshots

industry commentator zhang shule believes that "caesar culture relies too much on foreign ip to promote games.using ip to constantly reskin existing gameplay will eventually cause aesthetic fatigue among players, which is a major flaw of ip game companies.in the era of high-quality games, the way to arouse fans' feelings through ip has been developing more and more towards gameplay and technological innovation. caesar cannot just pursue quantity. if it wants to capture players for a long time, it still needs to focus on gameplay innovation rather than simply using ip to attract customers. "

zhang shule also said that the card model is relatively mature in terms of profit model, with low r&d difficulty, and it is easy to achieve the so-called "innovation" by changing the skin of various ips with a set of templates, butcard games, which were the mainstream type of mobile games in the early days, have gradually become non-mainstream.choosing this as the main focus may be a reflection of lagging r&d capabilities.

a search by "yema finance" found that before "city of reaper: dawn", mobile games such as "city of reaper: awakening of the martial god" and "city of reaper: born to be king" were operated on the app store, but "city of reaper: born to be king" was discontinued in june 2024 after two years of operation.

in the first half of 2024, caesar culture achieved operating income of 238.9741 million yuan, a year-on-year increase of 33.89%, and a net loss of 46.6747 million yuan, a year-on-year reduction of 51.69%.， if caesar culture fails to turn losses into profits in the second half of this year, caesar culture will have suffered losses for three consecutive years and may trigger an st risk warning.

can the "soul land: dawn" entrusted with this important task help caesar culture break the loss situation? can zheng heming's daughter zheng yashan restore the reputation of caesar culture?