\u3000\u3 Shengda Resources Co.Ltd(000603) 444 G-Bits Network Technology(Xiamen)Co.Ltd(603444) )
Key investment points
Event: in 2021, the company realized an operating revenue of 4.619 billion yuan (YoY + 68.44%), and a net profit attributable to the parent company of 1.468 billion yuan (YoY + 40.34%). At the same time, it is planned to distribute cash dividends of 160 yuan for every 10 shares to all shareholders, with a dividend rate of 78.30%. In 2021q4, the company realized an operating revenue of 1.134 billion yuan (YoY + 63.68%, QoQ + 3.26%) and a net profit attributable to the parent company of 263 million yuan (YoY + 4.48%, qoq-13.68%), and the performance basically met our expectations.
“Ask”, “ask for a hand tour” has excellent long-term operation, and “Yinian Xiaoyao” has contributed to the main performance increment. In 2021, the company’s revenue and net profit attributable to the parent company increased year-on-year, mainly benefiting from the continuous and stable performance of old travel, the year-on-year growth of revenue and profit, and the thickening performance of new travel online. In terms of old tour, the content of “ask” continued to iterate, and launched the wegame platform in March 2021, bringing new users and some old users back; The average ranking of IOS game bestsellers in 2021 is 20, up to No. 7. In terms of new tour, since the launch of the self-developed Xiuxian placement category “Yinian Xiaoyao”, it has maintained the rhythm of short-frequency update, and periodically launched large-scale play update and linkage activities, combined with the purchase promotion of the integration of product and efficiency. Its IOS game bestseller ranking is stable and upward, with an average ranking of 11 in 2021m2-m12, up to 5, and an average ranking of 12 / 12 / 10 in 2021q2-4. The company’s long-term operation ability continues to be verified. In 2022q1, “Yinian Xiaoyao” continued to perform well, ranking 10 on the best-selling list of IOS games on average, and overseas versions are reserved in the follow-up. We believe that “Yinian Xiaoyao” will continue to contribute to the profit increment and build a stable basic sector for the company’s performance with “ask for a hand tour”.
“Yinian” continued to buy higher sales expenses, and the deferred income of Xinyou put pressure on profits. In 2021, the gross profit margin of the company was 84.88% (yoy-1.12pct), which was mainly due to the increase of share due to the increase of agency products; The net profit margin attributable to the parent company is 31.79% (yoy-6.37pct), which is mainly due to 1) the continuous purchase of Yinian Xiaoyao and the expansion of its user base. At the same time, its Hong Kong, Macao and Taiwan version was launched in 2021q4, with large investment in early promotion, but it has not been profitable by the end of 2021. The company’s sales expense rate in 2021 was 27.57% (YoY + 16.66pct), of which Q4 was 38.69% (YoY + 25.68pct, QoQ + 12.78pct); 2) New tours such as Moore Manor, underground castle 3: the poem of the soul and the story of the world’s catapult have been launched, but as of the end of 2021, no financial profit has been generated, and the net profit is under pressure due to the mismatch of income and expenses. By the end of 2021, the company’s unamortized recharge and props balance totaled 726 million yuan, an increase of 404 million yuan compared with the end of 2020.
Rich reserves of diversified products and actively expand overseas business. The company’s new travel reserve covers the advantageous categories roguelike “dawn elite” and “ancient treasures” (with version numbers). At the same time, the company actively seeks to make users younger. The agent product “Obi island” (with version number) planned to be launched in 2022 is expected to help the company break the circle of users again. As of April 8, 2022, its reservation volume of the whole network is about 5 million. At the same time, the company actively expands its overseas business and reserves a variety of products such as Yinian Xiaoyao (overseas version), shopheroes Legends (store legend), underground castle 3 (overseas version), wonderful Combatant (overseas version), Kingdom inheritance (overseas version).
Profit forecast and investment rating: considering the deferred recognition of continuous marketing expenses and Xinyou revenue, we lowered the profit forecast for 2022. It is estimated that the EPS from 2022 to 2024 will be 25.02/30.30/34.30 yuan respectively (25.90/30.23 yuan before 20222023), corresponding to the current share price PE of 15 / 12 / 11x. We continue to be optimistic about the company’s boutique strategy practice and maintain the “buy” rating.
Risk tip: the long-term operation of the product is less than expected, the connection of new tours is weak, and the industry supervision is becoming stricter.
