Mingchen Health Co.Ltd(002919) (002919)
The strategic transformation continued to be promoted, and the game business contributed the majority of profits
Mingchen Health Co.Ltd(002919) has long been focused on the daily chemical industry, with brands such as tihuazhixiu. In August 2020, the company acquired 100% equity of Hainan huaduo and Hangzhou Leiyan with its own funds, taking the first step into the game industry. According to the 2021 interim report, the net profit contribution of the game business accounts for more than 80%; In October 2021, the company further acquired 100% equity of Kashi Aoshu held by Xinyuan interactive, a game company (the resolution of the board of directors has been passed and the general meeting of shareholders has not been held), and set up a subsidiary to layout the game distribution business; it plans to transfer the subsidiary Jiasheng printing, peel off the printing business and continue to work hard to cultivate the existing game categories.
R & D strength continues to thicken, and there are sufficient reserves of high-quality games
The existing games have excellent performance and strong R & D ability. The products of Hainan huaduo and Hangzhou Leiyan, the subsidiaries, have a long life cycle. After their release, they have continued to contribute more than 100 million monthly water, and have made outstanding overseas performance. The self-developed RPG mobile game anchor coming, a science fiction theme, has opened the whole network reservation. At present, the reservation amount of the game on taptap has exceeded 500000, with a score of 8.7 points. Kashgar Aoshu, the company to be acquired, has cooperated with byte and China Mobile Games. Relying on byte distribution resources and top Guoman IP, it is expected to bring greater performance growth to the company. Zhenhun Street: born to be king, relying on the popular IP zhenhun street, the score on taptap platform is as high as 8.8 points, the estimated number is nearly 380000, and the results of multiple rounds of tests are excellent.
The game industry has been booming for a long time, and the valuation of the sector is expected to increase
Games are an important carrier of culture going to sea. The e-sports industry has won multiple policy blessings, and the prosperity of the industry has not changed. Referring to the impact of the previous round of version number policy on the market of the game sector, we believe that the new round of version number policy will significantly affect the valuation of the game sector, and the recurrence of version number is expected to bring a large valuation repair market. As the earliest realization of the meta universe industrial blueprint, the development of meta universe related technologies will bring new growth drivers to the game industry, ignite new business models and help the long-term development of the sector. The two-dimensional game track has the characteristics of high R & D threshold, players’ picky on content, high loyalty and strong willingness to pay. With the growth of “generation Z” after 00, the two-dimensional game has a relatively high scene bearing.
Investment suggestion: for the first time, give “overweight” rating
We predict that the company’s revenue from 2021 to 2023 will be RMB 865 / 1276 / 1474 million respectively, the net profit attributable to the parent company from 2021 to 2023 will be RMB 168 / 405 / 504 million respectively, EPS will be RMB 1.38/3.31/4.13 respectively, corresponding to the closing price of RMB 42.77/share on December 10, 2021, and PE will be 31, 13 and 10 times respectively. Referring to the profit forecast and valuation of Wuhu 37 Interactive Entertainment Network Technology Group Co.Ltd(002555) and Perfect World Co.Ltd(002624) leaders in the same industry, we believe that Mingchen Health Co.Ltd(002919) has lower valuation and higher allocation value. For the first time, it will be rated as “overweight”.
Risk statement
Risks of daily chemical market competition; Risks of major regulatory policy changes in the industry; The risk that the business running in is not as expected; Risk of acquisition failure (the resolution of the board of directors has been passed and the general meeting of shareholders has not been held).
