\u3000\u3 Shengda Resources Co.Ltd(000603) 444 G-Bits Network Technology(Xiamen)Co.Ltd(603444) )
Event:
1. The company announced its performance in 2021, realizing an operating revenue of 4.62 billion yuan, yoy + 68.4%, a net profit attributable to the parent of 1.47 billion yuan, yoy + 40.3%, deducting a non net profit of 1.23 billion yuan, yoy + 36.2%.
2. In 2021, a cash dividend of 160 yuan (including tax) will be distributed for every 10 shares. The profit distribution amount in 2021 is expected to be 1.15 billion yuan, accounting for 78% of the net profit attributable to the parent company, and the dividend rate is 4.3% based on the current stock price.
Key investment points:
The performance is in line with expectations. New and old games have strengthened marketing promotion, R & D team expansion and salary improvement, resulting in a large increase in sales and R & D expenses. Some new products have not achieved financial profits due to factors such as prop amortization accounting standards.
Revenue side: in 2021, the annual revenue increased by 68.4%, mainly due to the excellent performance of the self-developed new placement products “Yinian Xiaoyao” and “ask for mobile game” launched in February 2021 (the average ranking of IOS best seller in 2021 was No. 11 / 20, the highest ranking was No. 5 / 7, and the average ranking of “ask for mobile game” in 2021 was 6 higher than that in 2020), New products such as Moore Manor, eight wastes of ghost Valley (PC version), underground castle 3 have also made contributions. By quarter, the revenue of each quarter in 2021 was RMB 1.12/12.7/11/1.13 billion, yoy + 51.1% / 89.7% / 71.4% / 63.7%.
Cost side: the operating cost in 2021 increased by 81.9% year-on-year, mainly due to the payment of share to several agent products “Moore Manor”, “ghost Valley eight wastelands (PC) version” and “underground castle 3” (the game was divided into 510 million yuan in 2021, accounting for 11% of the revenue, compared with 230 million yuan last year, accounting for 8%).
Expense side: in 2021, when the number of new games launched was large and the promotion of “ask for a hand tour” was increased, the sales expense increased greatly. The annual sales expense was 1.27 billion yuan, yoy + 325.7%, of which the publicity and promotion expense was 1.17 billion yuan, 240 million yuan last year, and the employee salary was 80 million yuan, 50 million yuan last year (YoY + 63.3%, the company’s operation and promotion personnel increased by 80 to 234 at the end of 2021). In terms of R & D, personnel expansion and salary increase promote the growth of R & D expenses. In 2021, the R & D expenses increased by 41.3% year-on-year to 610 million yuan, of which the employee salary was 570 million yuan, yoy + 52.5%, and the average salary of R & D personnel was 1.18 million yuan, yoy + 26%. At the end of 2021, the number of R & D personnel of the company was 530, accounting for 56%, an increase of nearly 100, yoy + 20.7%.
Profit side: the net profit attributable to the parent company in 2021 is 1.47 billion yuan, corresponding to the net profit attributable to the parent company in 2021q4 is 260 million yuan (YoY + 4.5%). From the perspective of deduction of non current assets, regardless of the profit and loss of 260 million from the disposal of non current assets (disposal of some equity of celadon digital), the financial income of 25.11 million (33.6 million last year, resulting from the decline of financial income rate this year), the non net profit of 1.23 billion yuan (YoY + 36.2%) and the non net interest rate of 26.5% in 2021 decreased by 6.3pct. From the perspective of products, the profits of Wenwen and Wenwen mobile games, which built the basic profit base of previous years, increased slightly in 2021, mainly from the new product Yinian Xiaoyao. However, other major new products such as Moore Manor, underground castle 3, world catapult story, Yinian Xiaoyao (Hong Kong, Macao and Taiwan version) are dragged down by factors such as prop amortization cycle, R & D share confirmation / early promotion investment, As of the end of 2021, financial profit has not been generated. By the end of 2021, the balance of the company’s prepaid recharge and props was 730 million yuan, an increase of 400 million yuan over the end of the previous year (including ① the balance of consumable props and recharge increased by 310 million, ② the balance of permanent props increased by 100 million).
The 6 reserved products have been granted the edition number. In the first half of the year, we paid attention to the anniversary of “asking questions” and “one mind carefree” × Progress on the launch of “Legend of mortal cultivation of immortals” and “Obi Island: dream country”.
The company’s reserved mobile game agent products include: feelings IP community development game Obi Island: dream country (with version number / full platform reservation number of more than 5 million), 2D roguelike shooting dawn elite (with version number / global authorization), urban simulation operation shopheroes legends store legend (with global authorization) Roguelike+SLG Project S (code name) (won by mainland China + Chinese mainland, Hong Kong, Macao and Taiwan), court to develop RPG “flower fall Changan” (has been issued number), adventure RPG “lost four territories” (already got the number), the rural garden simulation operation Project G (code name), the national wind RPG “Fengshen fantasy world”, Roguelike ARPG “ancient treasure” (has been published). Music rhythm “rhythm track” (authorized by the world), simulated operation “Shendu kitchen king”, etc. Key old games: the cumulative number of registered users of Yinian Xiaoyao has exceeded 10 million. Recently, it was announced that it will be linked with the animation biography of mortal cultivation of immortals. The first round of activities will be updated at the end of April, and the number of users is expected to be further expanded. On April 22, the 6th anniversary service of “ask for a hand tour” was scheduled, and the reservation will begin on April 11. The reservation of the 5th anniversary service in 2021 exceeded 3.6 million, a record.
Overseas, after the company successfully represented the strongest snail (Hong Kong, Macao and Taiwan version) to achieve a breakthrough in overseas revenue in 2020, it will further expand its overseas business in 2021, starting from transplanting mature online products in China, and plans to increase overseas investment in the future. Except for individual reserved IP products, other self-developed products must be positioned overseas before they can be approved. In 2021, the company’s revenue in Hong Kong, Macao, Taiwan and overseas regions was 140 million yuan, yoy + 46.6%, accounting for 3%. The company successfully released “ghost Valley eight wasteland (PC version)” (2021.1/topped steam global hot sales list for many times / sold more than 1.8 million copies in the first month), Ilona (2021.4/global distribution / focus on Japan / up to No. 2 in Japan’s IOS game free list) “One read free and unfettered (Hong Kong, Macao and Taiwan)” (202110/ highest to Taiwan China iOS game best seller list second). At present, overseas reserve projects include Yinian Xiaoyao (overseas version), shop heroes Legends (store legend), underground castle 3 (overseas version), wonderful Combatant (overseas version), Kingdom inheritance (overseas version), etc. At present, users of app and thunder village have been able to download and reserve game props on the app and thunder village in March. At present, users can exchange games on the app and around thunder village. Thunder village launched 68 yuan / quarter thunder game lightning card, which can receive a game props gift bag with a maximum value of 300 yuan and a number of rights and interests.
Profit forecast and investment rating: we expect the net profit attributable to the parent company from 2022 to 2024 to be RMB 1.57/18.6/2.18 billion, corresponding to EPS of RMB 21.8/25.9/30.3 and PE of 17 / 14 / 12x. The company has strong R & D and innovation ability, and is expected to break through the original ceiling in many emerging categories and create excellent products; Excellent research and transportation strength and reduced dependence on channels; Distribution and R & d go hand in hand to lay the foundation for the success of self-developed products. IP based operation ideas help to create multiple long-term operation products; Improve the overseas strategic position and add the globalization project of self-developed products. Based on this, maintain the “buy” rating.
Risk tips: industry policies, intensified competition, new products falling short of expectations, rising flow costs, life cycle of old products falling short of expectations, core brain drain, change of player preferences, exchange rate fluctuations, corporate governance / asset impairment / lifting of prohibition and reduction of holdings, market style switching, downward trend of Industry Valuation center, etc.
