\u3000\u3 Shengda Resources Co.Ltd(000603) 444 G-Bits Network Technology(Xiamen)Co.Ltd(603444) )
Report guide
On April 7, the company released its annual report for 2021, with high growth in revenue and profit. In 2021, the company achieved a revenue of 4.62 billion yuan, an increase of 68.4% at the same time; The net profit attributable to the parent company was 1.47 billion yuan, an increase of 40.3% at the same time. In 2021q4, the revenue was 1.13 billion yuan, an increase of 63.7% and a ring increase of 3.26%; The net profit attributable to the parent company was 263 million yuan, an increase of 4.48% and a decrease of 13.7%. The reason for the same increase in revenue and profit is that the game product line in 2021 is better than that in 2020. The reason for the decrease in profit is that there are three new online games in 2021q4, and the early sales expenses are large. We believe that the company’s mature games such as “ask” and “a thought of carefree” can contribute to a stable flow in the future. Obi island may be popular. The initial flow may be lower than that of “Moore Manor”, but it may be retained or slightly stronger in the future.
Key investment points
The revenue and profit level increased rapidly in 21 years, and the profit of Q4 decreased due to the launch of Xinyou
In 2021, the company achieved a revenue of 4.62 billion yuan, an increase of 68.4% at the same time; The net profit attributable to the parent company was 1.47 billion yuan, an increase of 40.3% at the same time; The net profit attributable to the parent company after non deduction was 1.23 billion yuan, an increase of 36.2% at the same time. The gross profit was 3.92 billion yuan, an increase of 66.3% at the same time; The gross profit margin was 84.9%, down 1.11pct. The sales expense was 1.27 billion yuan, an increase of 326% and the expense rate was 27.6%, an increase of 16.7 PCT; The management cost was 284 million yuan, with an increase of 20.9% and a cost rate of 6.15%, with a decrease of 2.42 PCT; The R & D cost was 609 million yuan, an increase of 41.4% and a decrease of 2.53 PCT, with a cost rate of 13.2%.
In 2021q4, the company achieved a revenue of 1.13 billion yuan, an increase of 63.7% and a ring increase of 3.26%; The net profit attributable to the parent company was 263 million yuan, an increase of 4.48% and a decrease of 13.7%; The net profit attributable to the parent company after non deduction was 223 million yuan, an increase of 13.2% and a decrease of 24.9%. The reason for the rapid year-on-year growth of revenue and profit in the fourth quarter is that the quantity and quality of the company’s product line in 2021 are greatly improved compared with that in 2020. The main stream contribution in 2020 is only “ask” mobile tour and end tour. In 2021, Yinian Xiaoyao and Moore Manor were added. The reason for the increase in revenue in the fourth quarter is that the revenue from online games will be gradually released in the middle of 2021, so the revenue in the fourth quarter will still increase in the fourth quarter under the high Q3 base. The reason for the decline in profits in the fourth quarter is that “underground castle 3: the poem of the soul”, “the story of the world’s catapult” and “Yinian Xiaoyao (Hong Kong, Macao and Taiwan version)” were all launched in the fourth quarter, and the initial publicity expenses were large, so they decreased more month on month.
The gross profit of 2021q4 company reached 1.03 billion yuan, with an increase of 66.8% and a ring increase of 10.5%; The gross profit margin was 91.2%, with an increase of 1.76 PCT and a ring increase of 6.27 PCT. The sales expense was 439 million yuan, an increase of 388% at the same time, an increase of 54.6% at the same time, and the expense rate was 38.7%, an increase of 25.7 PCT at the same time, and an increase of 12.8 PCT at the same time; The management cost was 76 million yuan, with an increase of 88.6% and 47.0% respectively, and the expense rate was 6.71%, with an increase of 0.89 PCT and 2.00 PCT respectively; The R & D cost was 131 million yuan, with a decrease of 2.18% and 13.9% respectively, and the cost rate was 11.6%, with a decrease of 7.79 PCT and 2.31 PCT respectively. We believe that the gross profit margin, management expenses and R & D expenses generally match the performance growth, and the sales expenses increase rapidly. The reason is that the number of online games in 2021q4 has reached three, and the early marketing expenses are large.
At present, there are 11 mobile games in reserve, 6 of which have edition numbers, and Obi island may be popular
The company has 11 mobile games, 8 of which are issued in Chinese mainland and 3 are issued globally. There are 6 models in the game issued in Chinese mainland.
We think the most worthy of attention is Obi Island: dream country, which can be compared with Moore Manor in 2021. We think the initial flow of the game may be lower than Moore Manor, but it may be slightly stronger in the future. The background of the game is similar to that of Moore Manor in 2021. Compared with Moore Manor, Obi Island: dream country is also a popular page tour in the 2000s, and also has a certain nature of community cultivation. The target groups are from post-95 to post-05. According to the company’s announcement, there are more than 5 million reservations on the whole network at present, and the latest test date is February 25. It is expected to be launched within the year. We believe that the IP influence of the game is slightly less than that of Moore Manor, which has a certain negative impact on the initial flow. However, on the basis of Moore Manor, we have carried out some iterations and learned some lessons, which is expected to surpass.
From the perspective of going to sea, the company will continue to export excellent IP in 2022. At present, there are overseas distribution plans for products such as Yinian Xiaoyao, underground castle 3, wonderful combatant and kingdom inheritance. In addition, there are three new global products, namely dawn elite, store legend and rhythm track.
Investment advice
We are optimistic that the company’s mature games such as “ask” and “Yinian Xiaoyao” will contribute a stable flow in the future. We believe that “Obi island” may be popular and is expected to replicate the “out of circle” of “Moore Manor”. The initial flow may be lower than that of “Moore Manor”, but it may be retained or slightly stronger in the future. At the same time, the company’s “fast running in small steps” strategy has achieved remarkable results. In the past two years, the company has harvested small products with good reputation, such as “eight wasteland in ghost Valley”. We expect that the company’s revenue from 2022 to 2024 will be 5.37/62.2/7.14 billion yuan respectively, and the net profit attributable to the parent company will be 1.60/18.9/2.2 billion yuan respectively. The corresponding P / E of the current stock price is 16.4/13.9/11.9 respectively, which is rated as “buy”.
Risk tips
The progress of version number reopening is lower than expected, and the online time and quality of Xinyou are lower than expected.
