\u3000\u3 Shengda Resources Co.Ltd(000603) 258 Hangzhou Electronic Soul Network Technology Co.Ltd(603258) )
Event: Hangzhou Electronic Soul Network Technology Co.Ltd(603258) recently released its annual report for 2021. The company achieved an operating revenue of 996 million yuan in 2021, a year-on-year decrease of 2.7%; The net profit attributable to the parent company was 339 million yuan, a year-on-year decrease of 14.19%; The net profit attributable to the parent company after deduction was 281 million yuan, a year-on-year decrease of 13.7%.
R & D investment expanded significantly, and the proportion of overseas business continued to increase. Affected by the overall slowdown of the industry and the high performance base brought by the housing economy at the beginning of the epidemic in 2020, the company's operating revenue and net profit attributable to the parent decreased in 2021. In terms of R & D investment, the company invested 210 million yuan in R & D expenses in 2021, with a year-on-year increase of 26.77%. Over the years, the company has paid attention to R & D accumulation, maintained a high technical level in game engine, server software, live viewing, synchronous verification, database cache, real-time strategic synchronization, and has a number of game modeling patents and computer software copyrights. In addition, the company's overseas business has gradually formed a scale in recent years. From 2019 to 2021, the overseas revenue was RMB 56 / 103 / 144 million respectively, accounting for 8.07% / 10.05% and 14.49% of the total revenue respectively. The quarterly flow of slgx card simulated operation mobile game "Huawu warring States" under the subsidiary mobile network in the first half of 2021 was the top 20 Chinese game in Japan. Since going to sea in 2017, mobile network has entered the top 20 of Google Apple's double list of best-selling products in Hong Kong, Macao, Taiwan, Japan, Vietnam, Indonesia and other regions, and its games cover many regions around the world.
Pay attention to the opportunity for "dream of Three Kingdoms 2" to be selected into the e-sports project of the Asian Games. The company is deeply engaged in national style boutique E-sports products. Its classic end game product "dream of Three Kingdoms 2" was officially selected into the first batch of official E-sports events of the 2022 Asian Games in November 2021. The Games selected with it are products with great influence in the world and carry the largest E-sports enthusiast group in the world. As a unique national style end game, dream of Three Kingdoms 2 was successfully selected into the Asian Games, It means that it will have more opportunities to be contacted by the world's E-sports lovers and gain higher world influence.
The existing products operate stably, and a number of new tours will be launched one after another. In 2022, the company's existing main game products, such as "dream of Three Kingdoms" end tour, dream of Three Kingdoms "mobile tour, my Xiake, barbarian people's congress battle and so on, will basically remain stable. With the 2022 Hangzhou Asian Games, the running water of "dream of Three Kingdoms 2" is expected to be further improved with the help of the event. In addition, the company's self-developed reserve projects "spiral warrior" and "operation 2 of barbarian people's Congress" have obtained version numbers. The agent products "Qiling notes" and "silentmist" are expected to be launched overseas within the year. The energy storage of new products is expected to bring obvious increment to the company's performance in the next 1-2 years.
Give "overweight" rating. We estimate that the company's revenue in 202224 will be RMB 1.179/14.34/1.650 billion respectively, and the net profit attributable to the parent company will be RMB 399518/617 million, corresponding to the closing price of PE on April 1, which is 16 / 12 / 10 times respectively, giving a "overweight" rating.
Risk warning: the risk of delayed release of version number; The risk that the performance of new products is less than expected; Risks of overseas supervision; Risk of shareholder reduction.
