\u3000\u3 Jiangsu Eastern Shenghong Co.Ltd(000301) 011 Guangzhou Wahlap Technology Corporation Limited(301011) )
Event: the company issued the 2021 performance report. The company achieved a revenue of 627 million yuan in 2021, with a year-on-year increase of 47.6%; The net profit attributable to the parent company was 52.535 million yuan, a year-on-year increase of 14.1%; The net profit attributable to the parent company after deducting non profits was 50.07 million yuan, a year-on-year decrease of 1.1%. The company has accrued 10.456 million yuan of asset impairment loss and 9.191 million yuan of credit impairment loss. In the single quarter of 2021q4, the net profit attributable to the parent company was 6.96 million yuan, down 71.8% year-on-year and 51.7% month on month.
The sales channels of animation derivatives have been expanded and maintained a high growth. Animation IP derivative business achieved a revenue of 175 million yuan, a year-on-year increase of 156.5%, and the revenue proportion increased by 11.86pct from 16.05% in 2020 to 27.91% in 2021. By the end of 2021, the company has invested nearly 10000 animation IP devices. It is expected that there will be about 2500 popular IP “Baoke dream” card machines. By the end of 2022, the number of such IP machines is expected to reach 4000. In addition to the traditional entertainment hall, the company’s animation card machine channel has been extended to shopping malls, multi-point, toy stores and other channels, and the consumption scene has been further opened.
The epidemic affected offline consumption, exhibitions and other activities, resulting in an increase in the company’s sales expenses. 1) The sales revenue of game and entertainment equipment business was 303 million yuan, a year-on-year increase of 14.5%. The operating income of equipment cooperation was 30.95 million yuan, a year-on-year increase of 9.9%. The operating revenue of amusement park was 99.8 million yuan, a year-on-year increase of 77.7%. The second half of the year includes important holidays such as summer vacation and national day. This is the peak sales season of entertainment hall. However, due to the impact of the epidemic on offline consumption, the relevant businesses of the company are greatly affected. 2) In order to strengthen brand publicity, the company held national E-sports competitions, live broadcast activities and participated in many industry exhibitions such as games and animation. The relevant promotion expenses increased, and the sales expense rate increased by 1.34pct to 4.79%.
Cooperate with Microsoft Xbox to launch the new IP “my world underground city”. The company joined hands with Microsoft Xbox and cooperated with my world developers mojangstudios, rawthrillers and playmechanix to jointly launch the first card game of my world underground arcade in January 2022, with a live heat of 1.86 million. At present, the IP model has the first batch of cooperative stores in Guangzhou, Shanghai, Shenzhen and other regions. Different from the previous stand-alone card game, this game can have up to four players fighting online. It is a cooperative family game. The fast-paced game playing method launched by the new IP and 60 exclusive cards that can be collected are expected to bring performance increment.
Profit forecast and valuation. The company is still optimistic about the broad space of the company’s animation IP derivatives business and the company’s core competitiveness for a long time. However, in view of the impact of the epidemic on offline consumption, the company’s profit forecast is lowered. It is estimated that the net profit attributable to the parent company will be 101 million yuan / 123 million yuan from 2022 to 2023, with a corresponding growth rate of 92.0% / 22.2%. The current share price corresponds to 34 times PE in 2022, maintaining the “buy” rating.
Risk warning: the impact of the epidemic exceeds expectations, the risk of tightening policies, and the risk that the upstream copyright party cannot renew the contract
