Changyou Alliance (1039) AI Stock Analysis

• Market Cap: HK$95.98M
• Dividend Yield: N/A
• Average Volume (3M): 2.05M
• Price to Earnings (P/E): ―
• Beta (1Y): -0.17
• Revenue Growth: -8.73%
• EPS Growth: 38.65%
• Country: HK
• Employees: 60
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Specialty Retail
• EPS (TTM): >-0.01
• Shares Outstanding: 1,810,953,200
• 10 Day Avg. Volume: 1,417,900
• 30 Day Avg. Volume: 2,049,200
• PEG Ratio: 0.11
• Price to Book (P/B): 0.43
• Price to Sales (P/S): 0.56
• P/FCF Ratio: -5.35
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 51 Neutral
• Price Target: HK$0.06 ▲(45.00% Upside)
• Action: Reiterated Date: 01/30/26
• Date: Action: Reiterated 01/30/26

Overall score is held back primarily by weak financial performance (declining revenue, persistent losses, and negative operating/free cash flow). Technicals provide some support via an uptrend above major moving averages and positive MACD, but valuation remains unattractive due to loss-making fundamentals and the absence of a dividend yield.

Positive Factors

Diversified monetization streams

Multiple monetization channels (in‑game purchases, subscriptions, advertising and licensing) provide structural resilience versus reliance on single title launches. Over months this mix can smooth revenue volatility, enable customer lifetime value extraction, and support iterative monetization strategies.

Focus on MMORPGs and immersive entertainment

Specialization in MMORPGs and immersive titles fosters higher engagement and longer content lifecycles than casual games. Durable engagement supports recurring monetization (subscriptions, expansions), IP development and community retention, which underpin longer-term revenue stability if titles remain competitive.

Relatively stable asset base

A comparatively stable equity ratio and asset base give the company balance sheet resilience despite operating losses. This supports continued investment in game development and marketing over several quarters and provides flexibility to restructure or pursue partnerships without immediate asset distress.

Negative Factors

Declining revenue trend

Material revenue decline erodes scale economics and increases unit cost pressure across development and operations. Over 2–6 months this weakens ability to fund live operations, content updates and user acquisition, making it harder to stabilize or grow top line without significant product or commercial shifts.

Persistent negative operating and free cash flow

Sustained negative OCF and FCF reduce liquidity and force reliance on external financing or asset dispositions. This constrains the firm's ability to invest in game development, marketing, and platform improvements long term, increasing execution risk and limiting strategic optionality over several quarters.

Rising leverage and negative ROE

Increasing leverage combined with negative ROE signals that creditors, not operations, are funding growth. Higher financial risk raises refinancing and interest burdens, and negative returns imply capital is not generating shareholder value, limiting scope for organic investment or M&A without balance sheet repair.

Changyou Alliance Business Overview & Revenue Model

Company Description

Changyou Alliance (1039) is a prominent player in the technology and entertainment sectors, primarily focusing on online gaming and interactive entertainment. The company develops and publishes a variety of online games, including MMORPGs (Massively Multiplayer Online Role-Playing Games), and offers related services that enhance user engagement and experience. Changyou Alliance aims to leverage innovative technologies to provide immersive gaming experiences and expand its market presence both domestically and internationally.

How the Company Makes Money

Changyou Alliance generates revenue through multiple streams, including in-game purchases, subscription fees, and advertising within its gaming platforms. The company monetizes its gaming titles by offering players the option to buy virtual goods or enhancements, which are crucial for unlocking advanced features and improving gameplay. Additionally, Changyou Alliance often partners with other gaming developers or platforms to co-develop games or share technology, which can provide additional revenue through licensing or profit-sharing agreements. Furthermore, the company may also earn income from merchandise sales and brand partnerships, as well as through sponsorships and promotional events that attract a wider audience to its gaming titles.

Changyou Alliance Financial Statement Overview

Summary

Income statement and cash flow are weak: revenues declined materially, margins and net income are consistently negative, and both operating and free cash flow are negative. The balance sheet is comparatively better (more stable asset base), but rising leverage and negative ROE keep overall financial quality below average.

Income Statement

Changyou Alliance has experienced declining revenues over the past year, with a significant drop from 2023 to 2024. The gross profit margin remains low, indicating challenges in cost management. The company has consistently reported negative net income, reflecting ongoing operational inefficiencies. EBIT and EBITDA margins are also negative, highlighting profitability issues.

Balance Sheet

The company's debt-to-equity ratio has increased, suggesting rising leverage and potential financial risk. However, the equity ratio remains relatively stable, indicating a solid asset base. Return on equity is negative due to persistent net losses, which is a concern for investors.

Cash Flow

Changyou Alliance's cash flow situation is concerning, with negative operating and free cash flows in the latest year. The operating cash flow to net income ratio is unfavorable, indicating poor cash generation relative to reported losses. Free cash flow growth is negative, reflecting challenges in maintaining liquidity.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	168.65M	180.71M	226.75M	215.04M	114.21M	268.84M
Gross Profit	40.52M	39.27M	39.27M	28.27M	12.67M	1.04M
EBITDA	4.71M	-1.95M	-5.33M	-17.55M	-93.97M	-71.28M
Net Income	-16.78M	-19.52M	-37.56M	-34.73M	-49.47M	-1.65M
Balance Sheet
Total Assets	145.35M	138.82M	149.55M	154.41M	191.01M	289.94M
Cash, Cash Equivalents and Short-Term Investments	26.75M	8.43M	25.71M	33.63M	51.34M	153.96M
Total Debt	165.56M	165.75M	168.76M	145.69M	115.92M	193.99M
Total Liabilities	304.25M	293.19M	302.87M	270.21M	253.23M	227.68M
Stockholders Equity	227.30M	232.70M	234.69M	271.55M	311.12M	361.07M
Cash Flow
Free Cash Flow	11.64M	-18.76M	6.65M	-7.15M	-103.90M	-105.36M
Operating Cash Flow	11.83M	-18.39M	6.91M	-7.01M	-103.39M	-104.25M
Investing Cash Flow	-393.00K	-552.00K	-157.00K	-527.00K	-530.00K	30.40M
Financing Cash Flow	2.17M	1.72M	-14.40M	-11.09M	3.82M	94.67M

Changyou Alliance Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 0.04
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HK:1039, the sentiment is Negative. The current price of 0.04 is below the 20-day moving average (MA) of 0.06, below the 50-day MA of 0.06, and below the 200-day MA of 0.05, indicating a neutral trend. The MACD of <0.01 indicates Positive momentum. The RSI at 30.40 is Neutral, neither overbought nor oversold. The STOCH value of 30.42 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for HK:1039.

Changyou Alliance Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
8473	63 Neutral	HK$132.16M	12.25	2.17%	52.54%	-11.32%	-74.44%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
1039	51 Neutral	HK$95.98M	-3.46	-7.18%	―	-8.73%	38.65%
1545	46 Neutral	HK$206.00M	-2.46	-4.46%	3.69%	-27.20%	-195.83%
2122	45 Neutral	HK$334.91M	-0.22	―	―	-15.54%	16.04%
1759	44 Neutral	HK$252.72M	-18.89	-3.11%	―	50.72%	-434.09%
0814	44 Neutral	HK$129.85M	-0.26	-14.00%	―	-8.17%	-49.53%