\u3000\u3 Shengda Resources Co.Ltd(000603) 444 G-Bits Network Technology(Xiamen)Co.Ltd(603444) )
Event: the company recently released its annual report for 2021. In 2021, the company achieved an operating revenue of 4.619 billion yuan, a year-on-year increase of 68.44%; The net profit attributable to the parent company was 1.468 billion yuan, a year-on-year increase of 40.34%; The net profit attributable to the parent company after deduction was 1.226 billion yuan, a year-on-year increase of 36.24%. “Yinian Xiaoyao” has brought the main growth of revenue, and the investment in R & D and marketing has expanded significantly.
In terms of revenue, the flow performance of the existing products “ask questions” and “ask questions hand tour” has increased steadily. The self-developed game “Yinian Xiaoyao” and the agent Games “Moore Manor” and “eight wastelands of ghost Valley (PC version)” launched in 21 years have contributed to the main revenue increment. The growth rate of the net profit attributable to the parent company and the net profit attributable to the parent company after deduction is lower than that of the revenue, which is mainly due to the higher marketing and promotion expenses in the early stage of Yinian Xiaoyao, which has reduced the overall profit margin of the company’s business. At the same time, due to the impact of the revenue recognition cycle of products such as Moore Manor, underground castle 3: Soul poem and the world catapult, the generation of some profits lags behind to some extent. In terms of gross profit margin, the gross profit margin of the company in 21 years was 84.88%, a decrease of 1.12% over the previous year. In terms of expenses, the company has significantly increased investment in R & D and marketing in recent years. The R & D expenses invested by the company in 21 years were 609 million yuan, a year-on-year increase of 41.1%; The sales expenses increased from 299 million yuan in the previous year to 1.274 billion yuan. The company actively upgraded the marketing mode by means of purchase volume and improved the touch rate and conversion rate of users.
The ranking and flow of existing products are stable under the strategy of integrating quality and efficiency. The company periodically launched large-scale play update and linkage activities for stock games, maintained good version iteration, and continuously expanded the user base through effect advertising and brand communication. Driven by continuous buying and efficient operation, “Yinian Xiaoyao” has always maintained a high ranking since its launch (the average number of IOS game bestsellers is No. 11 and the highest number is No. 5). At the same time, the company’s classic end game product “ask” has maintained good profitability for more than ten years, launched the wegame platform in 21 years, and obtained some new users and some old users. “Ask for a hand tour” has been online for six years. In 2021, it still ranked 20th on the IOS game best seller list, and continued to contribute high and stable revenue to the company.
The new product focuses on the launch of OBI Island: dream country and the opportunities brought by the accelerated pace of going to sea. In 2022, the company’s reserved products include Obi Island: a dream country, dawn elite, shop heroes legends, flowers falling in Chang’an, lost territory, etc. Among them, Obi Island: dream country is the company’s strategic product in 2022. Its page tour version has been in stable operation since it was launched in 2008, and has accumulated more than 300 million original user groups. At present, the reservation volume of the whole platform has exceeded 5 million, which is expected to bring considerable increment to the company’s performance in 2022. At the same time, in order to cope with the uncertain factors of Chinese version number distribution, the company has actively explored overseas business. Starting with the transplantation of Chinese mature products, the company has successfully released products such as ghost Valley eight wasteland (PC version), ELONA (Ilona), EZ Knight (cute Knight), Yinian Xiaoyao (Hong Kong, Macao and Taiwan version), which has initially opened the overseas market. It is expected that the company will continue to increase investment in the overseas market in the future, Starting from the project approval of self-developed products, strengthen the positioning of overseas markets.
Give “overweight” rating. We expect that the company’s revenue in 202224 will be 5.168/6.061/7.181 billion yuan respectively, and the net profit attributable to the parent company will be 1.732/19.52/2.171 billion yuan, corresponding to the closing price of PE on April 8, which is 15 / 13 / 12 times respectively. It will be covered for the first time and rated as “overweight”.
Risk warning: the risk that the performance of new products is less than expected; Risk of new product delay; The risk of current product decline; Policy and regulatory risks.
