\u3000\u3 Jiangsu Eastern Shenghong Co.Ltd(000301) 011 Guangzhou Wahlap Technology Corporation Limited(301011) )
Key investment points
Event: in 2021, the company realized an operating revenue of 627 million yuan, a year-on-year increase of 47.55%, and a net profit attributable to the parent company of 53 million yuan, a year-on-year increase of 14.06%, of which 2021q4 realized a net profit attributable to the parent company of 6.96 million yuan, a year-on-year decrease of 71.8%, and the performance was lower than our expectation.
The revenue of animation IP derivatives increased rapidly, and joined hands with Microsoft Xbox to launch the first card game “my world dungeon arcade”. In 2021, the company’s animation IP derivatives business achieved a revenue of 175 million yuan (YoY + 156.52%), accounting for 27.91% (YoY + 11.86pct) of revenue and 38.05% (YoY + 4.82pct) of gross profit margin. We believe that it is mainly due to the increasing proportion of baokemeng IP revenue with high selling price. By 2021, the company has put in nearly 10000 animation and cartoon equipment, covering more than 2000 amusement park stores. In addition, in January 2022, the company joined hands with Microsoft Xbox and cooperated with my world developers mojangstudios, rawthrillers and playmechanix to jointly launch the first “my world dungeon arcade” card game, with 60 exclusive cards that can be collected and various playing methods. We believe that the company’s animation and cartoon equipment investment and the average number of cards per device per day are still in the climbing stage. With the abundance of IP, the income of animation IP derivatives business will continue to increase.
The growth rate of equipment sales revenue has become positive, and the epidemic has affected the profitability of self operated amusement parks. In 2021, the company’s equipment sales revenue reached 303 million yuan (YoY + 14.47%), the revenue accounted for 48.28% (yoy-13.95 PCT), and the gross profit margin was 29.23% (yoy-0.73 PCT). In terms of operation business, the revenue from equipment cooperative operation was 31 million yuan (YoY + 9.90%), the revenue accounted for 4.94% (yoy-1.69pct), and the gross profit margin was 38.65% (YoY + 3.62pct); The operating revenue of amusement parks reached 100 million yuan (YoY + 77.71%), accounting for 15.92% (YoY + 2.70pct) of revenue and 1.76% (yoy-7.04pct) of gross profit margin, which was mainly due to the repeated covid-19 epidemic in the second half of 2021, which affected the peak operating seasons of industries such as summer vacation and holidays, resulting in the weakening of the profitability of self operated amusement parks.
The holding of exhibitions has increased the sales expenses. In 2021, the company’s gross profit margin of sales was 27.69% (yoy-0.10pct), net profit margin of sales was 8.38% (yoy-2.46pct), R & D expense rate was 2.75% (yoy-0.12pct), financial expense rate was 1.90% (YoY + 1.17pct), management expense rate was 6.15% (YoY + 0.95pct), and sales expense rate was 4.79% (YoY + 1.33pct). The main reason was that the company held Huali E-sports events, card carnivals and other activities to improve product image and popularity. In addition, the company accrued 10.46 million asset impairment losses, mainly due to the provision for goodwill impairment and inventory depreciation, and 9.19 million credit impairment losses, mainly due to the provision for impairment of accounts receivable, resulting in pressure on net profit.
Profit forecast and investment rating: considering the repeated outbreaks in various regions in the first half of 2022, we lowered the previous profit forecast. It is estimated that the company’s EPS from 2022 to 2024 will be 1.29/1.70/2.00 yuan respectively (2.06/3.14 yuan before 20222023), and the corresponding closing price PE on April 1, 2022 will be 32 / 24 / 20 times respectively. The animation IP derivatives business of the company has built a solid competitive barrier, and is optimistic about the continuous high growth of the business income and maintaining the “buy” rating.
Risk tips: the risk of repeated epidemic, the operation of animation IP derivatives equipment is less than expected, the risk of accounts receivable, the risk of intensified market competition and the risk of macroeconomic fluctuation.
