Baofeng Technology, one of China's mainstream video game software developers, proved a hit on its first Growth Enterprise Market trading day despite a negative outlook for the first quarter.

Shares on the Shenzhen Stock Exchange closed at 10.28 yuan ($1.66) on Tuesday, up 44 percent from its offer price of 7.14 yuan, boosting the company's market value to 1.23 billion yuan.

Baofeng planned to raise 214 million yuan by issuing 30 million shares, with a price-to-earnings ratio of 22.97, according to the company's listing document.

Beijing Baofeng Technology Co, founded in 2007, is the developer of Storm Codec player, one of the most popular video players in the country.

The company reported an 8.8 percent year-on-year increase in net profit attributable to shareholders to 41.9 million yuan in 2014.

Although the company enjoyed a good start on the first trading day, challenges may lay ahead, a report from ifeng.com said.

According to filings, Baofeng expects a net loss of 5 to 6 million yuan in the first quarter.

Baofeng could benefit from its latest product, wearable magical glasses, said the ifeng.com report.

The glasses, at 99 yuan, are said to enhance the viewing experience for users who watch videos on smartphones.

With the glasses, combined with Baofeng's technology experience, the company is attempting to transform to the virtual reality video platform, said the report.

A company will be set up to focus on developing the technology, as current products are not mature enough, Baofeng vice-president Wang Gang said.