Event: Hangzhou Electronic Soul Network Technology Co.Ltd(603258) released the results of the whole year of 21 on the evening of March 30, 22. In the 21st year, the revenue reached 996 million yuan, yoy-2.70%. The gross profit margin in 21 years is 82.81%, yoy-3.28pcts. In the 21st year, the sales expense was 169 million yuan, yoy-26.29%, and the sales expense rate was 16.98%, yoy-5.43 PCTs. The management fee is 98 million yuan, yoy + 13.07%, the management fee rate is 9.88%, yoy + 1.38 PCTs; The financial expense is – 14 million yuan, and the financial expense rate is – 1.38%, yoy-1.89 PCTs. The net profit attributable to the shareholders of the listed company was 339 million yuan, yoy-14.19%; The total assets of the company are 3.095 billion yuan, yoy + 2.61%; The net assets attributable to shareholders of listed companies were 2.453 billion yuan, yoy + 10.52%. In the 21st year, the company plans to distribute a cash dividend of 8.25 yuan (including tax) to all shareholders for every 10 shares, and the total cash dividend is expected to be 200 million yuan.
In terms of products, in the whole year of 21, the revenue of client / Mobile Games was 560 / 421 million yuan, yoy + 10.61% / – 17.74%, the gross profit margin was 89.52% / 75.25%, yoy-2.21pcts / – 5.75pcts respectively, and the share of end games was stable. In terms of regions, in the past 21 years, the domestic / overseas revenue was 837 / 144 million yuan, yoy-8.59% / + 40.36%, the gross profit margin was 82.21% / 90.28%, yoy-3.80pcts / + 1.09pcts respectively, and the overseas revenue gradually appeared. According to the sales model, the company’s self operated / intermodal / agency revenue in 21 years was RMB 722 / 205 / 0.55 billion, yoy + 5.51% / – 19.79% / – 30.84%, and the gross profit margin was 87.55% / 76.65% / 53.78% respectively, yoy-1.99pcts / – 8.73pcts / – 7.83pcts, and the self research continued to increase.
Continue to increase investment in R & D and rich reserves of technical patents. In the 21st year, the R & D cost reached 210 million yuan, yoy + 26.77%, the R & D cost rate reached 21.12%, and the number of R & D personnel accounted for 50.20% of the total number of the company. The company’s senior R & D team has reached China’s leading level in distributed server architecture technology, game graphics engine technology and RTS game synchronization technology, and has built a full link operation system. There are 38 patents authorized by the company and its subsidiaries, 94 invention patents in the trial, 375 soft work registrations, 273 art registrations and 926 registered trademarks. The company insists on focusing on technological innovation and product R & D, and actively promotes R & D innovation guided by market demand and user experience.
A number of high-quality games operate stably, and “dream of Three Kingdoms 2” is selected as the e-sports project of the Asian Games. The company’s flagship IP “dream of Three Kingdoms 2” was selected into the official E-sports competition of the 2022 Asian Games, highlighting the company’s many years of experience in national style game research and development and E-sports events. Entering Asia is expected to further expand the popularity of the company’s products. The company’s main self-developed games include end game products “dream of Three Kingdoms”, “dream tower defense” and “dream of Three Kingdoms 2”; Mobile game products include “dream of the Three Kingdoms mobile game” (Reprinted Edition), “my knight”, “God solver”, “dream tower defense mobile game”, “barbarian people’s war”, “X3 spiral warrior”, “Yuan Neng out of control: Expedition”, etc. The company also has diversified layout in the fields of H5 games, VR games, mainframe games, stand-alone games, APP platform, comics and E-sports events.
The subsidiaries have abundant resources to swim to the sea and actively expand new channels for overseas issuance. The subsidiary swimming network started to go to sea in 2017. According to sensortower, Japan’s self-developed card “Huawu Warring States” q1-q2 was launched in January 21, and the cumulative water flow is the top 20 of China and Japan. The mobile network has established good cooperative relations with Efun, oasis, Youzu, Changyou, etc., and has released high-quality products in Hong Kong, Macao, Taiwan, Japan, Vietnam, Indonesia and other regions. The company will further actively layout overseas R & D and distribution, steadily promote the R & D capacity of global online games, expand overseas distribution channels and operations, and strengthen the export of national style culture.
The results of the electric soul incubator have initially shown, helping the industry to form a cluster ecology. Dianhun intelligent creative incubator was rated as a provincial science and technology enterprise incubator in 2021. Since 17 years ago, the company has built an incubator integrating “incubation, entrepreneurship, investment and financing” for e-sports, games and intelligent creative science and technology enterprises. The characteristic incubation mode of “industry + capital + base” is adopted to create a perfect incubation service system based on the layout of “space, service and investment”. At present, a collection of interconnected, supported and open science and Technology Parks has been formed. The Park welcomes the incubation of upstream and downstream enterprises of digital entertainment industry, and has initially formed a cluster atmosphere.
Investment suggestion: the company’s long-term operation of national classics such as “dream of Three Kingdoms” series and “my Xiake” will bring sustainable profitability and lay the foundation for the company. “Dream of Three Kingdoms 2” was selected in the Asian Games to raise the IP value of the game. It is recommended to pay attention to the profit thickening brought by the launch of the company’s new tour and the acceleration of going to sea in 22 years.
Risk tip: the online time of Xinyou is less than expected; Intensified market competition; Macroeconomic impact; Overseas market expansion is less than expected
