When it comes to video games, China is a big deal.
Some 772 million Chinese played some sort of game in 2019. And of those people, 637 million are mobile gamers. People who play video games on their smartphones.
It is one of the biggest and most lucrative sectors in the whole gaming industry. Which is why so many companies are desperate to be a part of it.
Including one tiny stock on the ASX known as iCandy Interactive Ltd [ASX:ICI]. A $35 million market cap game developer.
And today, thanks to some good news regarding China, their stock is up 20.59%!
Tying the knot with Alibaba
Earlier this year (23 May), iCandy was lucky enough to strike a deal with 9Games. A small subsidiary of the much larger Alibaba Group.
Together, the pair’s goal was to help iCandy publish some of their games to a Chinese audience. Giving them access to the biggest mobile gaming market in the world.
Today, with the help of 9Games, iCandy’s documentation for official approval has been finalised. Meaning they just have to lodge the documents and wait for a verdict from the Chinese government.
As iCandy states:
‘The regulatory process is a stringent process that now limits a select group of game titles to be allowed into the lucrative Chinese game market.’
That may sound extreme for a simple mobile game, but those are the rules. iCandy simply must play by them if they want any hope of launching in China.
Thankfully, with 9Games’ help and partnership, that may help their bid. A fact that is no doubt behind the spike in trading today.
Only time will tell if they’re successful or not though.
Naturally, this process is a huge deal for iCandy. With this first bid just one of six games they hope to launch in China.
As such, getting approved could make or break this company.
For that reason, investors should be very careful when it comes to this stock. Because while they have plenty of potential, one bad decision could derail their growth pipeline entirely.
So, beware before potentially buying this stock.
If, however, you’re looking for small-cap recommendations with a little more substance, we’ve got you covered. Our ‘high-value small-cap’ report can show you a myriad of great places to park some capital. Including four of our favourite stocks in this space right now.
For Money Morning