\u3000\u3 China Vanke Co.Ltd(000002) 555 Wuhu 37 Interactive Entertainment Network Technology Group Co.Ltd(002555) )
Core view
The R & D capacity of high-quality Games has been upgraded, and the expansion of “dual core + multiple” categories has become more stable. China’s game market has entered the stock era, and the “high-quality” games that stimulate the needs of players are the highland of competition. “Douluo continent: duel between soul masters” broke 700 million in the first month, which verified the company’s research and development ability of next-generation boutique games, and also proved the company’s ability to innovate through iteration and continue to maintain its advantages in mature category tracks such as ARPG. At the same time, based on the strategy of “dual core + diversification”, the company has achieved category breakthrough. The proportion of two categories of MMORPG and SLG, simulation operation, card and other long-term products in the company’s product structure has increased, which helps to bring continuous and stable flow, reduce the risk of single category, and the company’s business model has become more stable.
The advantages of refined traffic operation are obvious, and AI big data system helps to improve quality and efficiency Wuhu 37 Interactive Entertainment Network Technology Group Co.Ltd(002555) started with game operation and has always been competitive in fine operation to grasp the flow dividend. Since 2018, the company’s purchase investment has increased rapidly, and AI Artificial intelligence system has been introduced to achieve a positive cycle of positioning, material selection, delivery and feedback, occupying a favorable position in the purchase market. The company’s flow operation is accurate and efficient. The flow operation from quantity to quality not only controls the cost, but also the production ratio far exceeds the average level of the industry, so as to consolidate the flow operation advantage.
The pattern of overseas game market is uncertain, and there is broad space to go to sea. It is expected to establish a first mover advantage. The overseas market has a large scale, wide space and great room for improvement in penetration. The scale of major target markets such as the United States, Japan and South Korea exceeds 70 billion US dollars. At present, the overseas market pattern is uncertain, the market preferences in different regions are different, it is difficult for a single game company to cover, and there is a wide space for development. Wuhu 37 Interactive Entertainment Network Technology Group Co.Ltd(002555) is one of the earliest Chinese game manufacturers to go to sea, with rich experience in overseas distribution and operation. The company continued to overweight overseas game R & D companies, and its overseas revenue increased by 16.6% year-on-year in the first half of 2021. The currently issued works of overseas revenue, such as Puzzles & survival and the song of Cloud City, have made remarkable achievements overseas. The company is expected to establish advantages in the overseas market by virtue of its mature issuance and operation experience and China’s buying model.
Investment suggestion: the company’s overseas business in China is progressing smoothly, the profits of many new online games are gradually released, the flow of new games is growing steadily, the game reserves are rich, and the profit expectation is relatively stable. We estimate that the net profit attributable to the parent company from 2021 to 2023 will be RMB 2.827 billion, RMB 3.699 billion and RMB 4.207 billion respectively, and EPS will be RMB 134, RMB 1.75 and RMB 1.99, corresponding to 14.98, 11.44 and 10.06 times of PE. For the first time, give a “buy” rating.
Risk tip: the launch of the new game is not as expected; The release of version number is delayed; Overseas policy uncertainty;
