\u3000\u3000 Wuhu 37 Interactive Entertainment Network Technology Group Co.Ltd(002555) (002555)
The performance exceeded the consensus expectation of the market, and Q4 performed well
The company released the performance forecast. It is expected to realize the net profit attributable to the parent company of RMB 2.80-2.85 billion in the whole year of 21, with a year-on-year increase of 1.41% – 3.23%, exceeding the consensus expectation of the market (the consensus expectation of wind is that the net profit attributable to the parent company is RMB 2.65 billion), and the corresponding EPS is RMB 1.28-1.30; The net profit deducted from non profits was 2.55-2.6 billion yuan, with a year-on-year increase of 6.61% – 8.70%; Among them, the net profit attributable to the parent company of Q4 was 1.08-1.13 billion yuan, with a year-on-year increase of 116-126%, continuing to maintain a high growth trend.
New products and good performance at sea
1) during the year, the company’s new products “Douluo continent: duel between soul masters”, “glory Archangel”, “Immortal King”, “Douluo continent: Awakening of Wu soul”, as well as the global release of “Puzzles & survival”, “call me big shopkeeper”, “song of Cloud City” and many other games performed well, and the self-developed layout results were constantly displayed; The sea market has also performed well and has become a leading game sea manufacturer in China; 2) Driven by high-quality products and diversification, the company’s R & D investment continues to increase and the new product reserve is sufficient. SLG’s code three by, code AOE, card code C6, MMO code 3D WTB and other products are launched one after another, which is expected to drive the continuous improvement of the company’s profitability.
Risk warning: the new products do not meet expectations; The release of version number is later than expected; Regulatory policy risk, etc.
Investment suggestion: be optimistic about the long-term growth potential of the company and continue to maintain the “buy” rating.
We raised the 21-year profit forecast (by 8.7% to 2.83 billion yuan) and maintained the 22 / 23-year profit forecast. It is estimated that the net profit attributable to the parent company from 2021 to 2023 will be 28 / 33 / 38 billion yuan respectively, with a year-on-year growth rate of 2 / 16 / 16%; Diluted EPS = 1.27/1.48/1.72 yuan, and the current share price corresponds to PE = 17 / 15 / 13X. The company’s issuance business continues to maintain a leading position, its product self-research performance is good, and its overseas expansion is smooth. Under the subsequent release of rich new product reserves, it is expected to resume a high growth rate. In the short term, due to the impact of factors such as the expectation of version number policy, the stock price adjustment is relatively significant, giving a good layout opportunity and continuing to maintain the “buy” rating.
