On August 14, 2026, Hong Kong-listed gaming firm TANWAN (09890.HK) issued a profit warning, projecting a net profit of roughly RMB 200 million to RMB 250 million for the six months ending June 30, 2026. This marks a steep decline of about 62% to 69% compared with the RMB 650 million recorded in the same period of 2025.
Following the profit warning, TANWAN's share price came under pressure, slipping to HK$9.735 per share by August 19, roughly halving from its yearly high. Over a longer timeframe, the company's earnings have been highly volatile. From 2021 to 2024, its net profits attributable to shareholders were RMB 615.9 million, RMB 514.1 million, RMB 235.5 million, and RMB -3.624 million, respectively.
In full-year 2025, net profit rebounded sharply to RMB 1.487 billion—but that surge was primarily driven by fair value gains on financial assets, not by improvements in the core gaming business. The abrupt profit drop in the first half of 2026 is the inevitable outcome of stripping away the non-recurring high base set in 2025.
The revenue picture is equally concerning. After a 53.72% surge in 2022 to RMB 8.817 billion, revenue has declined for two consecutive years, falling to RMB 5.58 billion in 2024. In 2025, total revenue slipped further to RMB 4.158 billion, down 25.48% year-on-year. Self-operated gaming revenue dropped from RMB 4.119 billion in 2024 to RMB 2.767 billion, a decline of 32.83%.
The company attributed the net profit decline to two key factors. First, fair value gains on financial assets shrank significantly. In 2025, TANWAN leveraged fair value gains from its shareholdings in other listed companies to drive a massive profit surge. In 2026, capital market volatility has caused these gains to dwindle substantially, directly dragging down profitability. With this profit amplifier neutralized, the deterioration of the core gaming business is now fully exposed.
Second, existing games are entering the late stage of their lifecycles, with ongoing revenue declines. This represents a structural recession at the operational level. Key titles launched in recent years, such as Soul Land: Shrek Academy and Beast Lord: The New World, performed strongly in 2024—the former surpassing RMB 100 million in first-month revenue and topping the iOS free chart on its launch day, while the latter's overseas version generated nearly RMB 100 million in annual revenue. However, both saw notable revenue declines in the first half of 2026.
Meanwhile, the company has been optimizing its publishing and marketing efficiency while shifting more focus toward mini-program game distribution, which has reduced the overall promotional scale for some titles and further accelerated revenue declines.
In July 2026, the company launched the side-scrolling fighting mobile game Time Hunter: Awakening, which has entered full-platform public testing. That same month, TANWAN completed a strategic investment in the developer of Tian Long Ba Bu 2: Flying Dragon Battle, securing exclusive operating rights for both the App and mini-program versions. However, in the first half of 2026, these new products have yet to generate sufficient revenue to offset the decline from legacy titles. It takes time for new releases to scale from public testing to meaningful profit contributions, while the slide in older games is a present reality.
For TANWAN, the key variables for the second half of 2026 are whether new titles like Time Hunter: Awakening can deliver stronger-than-expected revenue performance, and whether financial market conditions can offer room for recovery in the fair value of its asset holdings. Until then, the earnings rollercoaster is likely to persist.