\u3000\u3 Shengda Resources Co.Ltd(000603) 444 G-Bits Network Technology(Xiamen)Co.Ltd(603444) )
Event:
On April 7, the company released its annual report for 2021. In 2021, the company’s operating revenue and net profit attributable to the parent company were 4.619 billion yuan and 1.468 billion yuan respectively, with an increase of 68.44% and 40.34% respectively; The net profit deducted from non parent company was 1.226 billion yuan, an increase of 36.24% at the same time; EPS in 2021 is 20.43 yuan; At the same time, the company plans to pay 160 yuan for 10 shares, with a dividend rate of 78.3%.
Comments:
Outstanding performance, high score red highlights the investment value. The company plans to pay 160 yuan for 10 shares, with a total dividend of 1.15 billion yuan in 2021, with a dividend rate of 78.3%. Since 2017, the accumulated cash dividend has been 3.571 billion yuan, indicating the high value and strong responsibility of the company.
1. Revenue side: the high year-on-year growth of the company’s operating revenue is mainly due to: (1) the excellent performance of the self-developed mobile game “Yinian Xiaoyao” during the reporting period, which is expected to contribute to the main incremental revenue. The main reason is that the game content is accurately placed on the Xianxia vertical track and continues to buy on a large scale. According to the release data of dataeye in recent 90 days (April 2021), “Yinian Xiaoyao” ranks first in the purchase volume of Xianxia theme with 6611 groups of release materials. The number of release days lasts 132 days, and the release scale is far higher than that of the second “cold knife in the snow” (Group 3923). (2) During the reporting period, the revenue of Jinniu’s traditional projects “asking questions” and “asking questions hand tour” increased year-on-year. Among them, “asking questions” continued iterative development of version content and launched wegame in March 2021. (3) During the reporting period, agent games such as Moore Manor, eight wastelands of ghost Valley (PC version), underground castle 3: poem of the soul contributed revenue.
2. Profit side: the year-on-year growth rate is lower than that of revenue side, mainly due to: (1) Moore Manor, underground castle 3: Soul poem, world catapult and other products have not generated financial profits by the end of the period due to the influence of prop amortization cycle and accounting recognition rules for R & D share; (2) “Yinian Xiaoyao” is a volume product, with a higher rate than other self-developed products. Among them, the marketing and promotion expenditure of the mainland version is high, and the financial profit margin is lower than that of other self-developed products; The Hong Kong, Macao and Taiwan version was launched in October 2021, with large marketing investment in the early stage and no profit for the time being; (3) The company continued to increase R & D investment.
3. Expense side: affected by the increase of marketing expenses, the gross profit margin and net profit margin of the company decreased slightly year-on-year. In 2021, the gross profit margin and net profit margin of the company were 84.9% (- 1.1pct) and 31.8% (- 6.4pct) respectively. The decrease in net interest rate was mainly due to: (1) the main contribution of the company’s operating revenue increment was the purchase volume product “Yinian Xiaoyao”, and the marketing expenditure increased significantly; (2) Affected by the suspension of edition number distribution, the company has increased the layout of sea business and is still in the marketing promotion period; (3) Affected by the above, the company’s sales expense ratio increased significantly, reaching 27.57% (+ 16.66pct) in 2021.
4. Cash flow side: the business model is excellent, and the net cash flow from operating activities continues to grow. In 2021, the net cash flow from operating activities of the company was 2.418 billion yuan, an increase of 885 million yuan (+ 57.7%) year-on-year.
There are edition numbers and abundant products in reserve. Pay attention to the online time point of OBI Island: dream country and the rhythm of products going to sea. According to the company’s announcement, the company’s reserved version number agency products include Obi Island: a dream country (community cultivation), roguelike shooting, flower falling Chang’an (court cultivation RPG), lost four places (Adventure RPG), projectg (code) (pastoral simulation operation), and roguelike ARPG. Among them, Obi island is a community nurturing game with high IP value. The page tour terminal of OBI island has been in operation for 13 years since it was launched in 2008, with a cumulative registration of 300 million, a maximum monthly life of more than 11 million, and a huge IP user group. According to the survey data of iResearch consulting in 2012, Obi island was highly active in the national role development category in 2012. The mobile game version of OBI island is expected to fully benefit from the strong IP popularity. The number of reservations on the first day of opening reservations in April 2021 is more than one million. At present, the number of reservations on the whole network has exceeded 5 million, the reading of relevant microblog topics has exceeded 100 million, and has rushed into the hot search list for many times. Obi Island, Moore Manor and Locke Kingdom belong to the three generation Z community nurturing game IPS. With reference to the first month performance of mobile games of Moore Manor, the flowing performance of mobile games of OBI Island (expected to be tested in 2022) is worth looking forward to.
Investment advice
The company has excellent R & D capability and excellent operation platform thunder game. Affected by the suspension of edition number, it is expected that the main performance increment of the company in 2022 will come from heavyweight proxy games and game going to sea. Regardless of the impact of the centralized launch of the game after the release of the version number, we expect that the company’s net profit attributable to the parent company from 2022 to 2024 will be 1.623 billion yuan, 1.854 billion yuan and 2.227 billion yuan respectively, with an increase of 10.5%, 14.3% and 20.1% respectively, corresponding to EPS of 22.58 yuan, 25.79 yuan and 30.98 yuan respectively, and the current share price corresponding to PE is 16.55 times, 14.48 times and 12.06 times respectively. Maintain the “buy” rating.
Risk tips
The deterioration of industry competition exceeded expectations, the release rhythm of edition number was less than expected, the online performance of OBI island was less than expected, the decline of old games was more than expected, and the performance at sea was less than expected.
