(Yicai Global) Nov. 1 -- Shares in Mingchen Health hit the exchange-imposed limit of 10 percent today after the Chinese personal care products firm said it is preparing to shell out 1,400-times the declared assets of online game developer Kashi Aoshu Network Technologies to extend its footprint in the gaming sector.

Mingchen Health’s share price [SHE:002919] closed up 3.19 percent today at CNY48.56 (USD7.60). It had earlier in the day reached CNY51.77.

The acquisition, which at CNY219 million (USD34.2 million) is 1,400 times Kashi Aoshu’s declared assets of CNY155,400 (USD24,272), will lay a more solid foundation for the company’s long-term development in the game industry, Mingchen Health said yesterday. It will also help cultivate new growth points, expand product categories and increase the talent pool.

Last August, the hair products and shower gel manufacturer bought game publishers Huaduo Network Technology and Leiyan Network Technology. The two acquisitions have brought in net profit of CNY180 million (USD28 million) in the past year, equal to four years of Mingchen Health’s profit between 2015 and 2019.

Kashi Aoshu, which was set up less than a year ago in December 2020, already has two big contracts, one of which is with ByteDance. The game developer is due to get a CNY60 million (USD9.4 million) payout from the TikTok operator for completing the demo and will receive an up to 17 percent cut of the game’s revenue once it goes global in 2023.

The Kashgar, Xinjiang Uyghur Automonous Region-based firm claims to have CNY219 million worth of intangible assets and has pledged to Mingchen Health that it will get a full return on its investment by the end of 2025.

Online games have become a popular source of entertainment amid the Covid-19 pandemic and gaming companies are expected to keep on growing after the outbreaks are contained, whereas Mingchen Health’s personal care products are facing increased competition and bottlenecks in development, the Shantou, Guangdong province-based company said earlier.

Editor: Kim Taylor