\u3000\u3 Shengda Resources Co.Ltd(000603) 444 G-Bits Network Technology(Xiamen)Co.Ltd(603444) )
The company released its annual report for 2021, and achieved an operating revenue of 4.619 billion yuan in 2021, with 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, with a year-on-year increase of 36.24%, and the basic earnings per share was 20.43 yuan.
Key investment points:
“Yinian Xiaoyao” contributes to the main incremental revenue and profits, and “ask for a hand tour” maintains long-term vitality. In 2021, the new online self-developed game “Yinian Xiaoyao” achieved good response, contributed to the main incremental revenue and profits, and became another core self-developed product of the company after “asking questions” and “asking questions hand tour”. According to the data of Qimai, Yinian Xiaoyao ranked 11th on average in the best-selling list of app store games in the past year, up to 5th, with a cumulative number of registered users of more than 10 million. “Ask” and “ask mobile game” rely on long-term operation, continuous iterative development of content, anniversary celebrations, and increase marketing efforts to stimulate revenue and profits. In recent years, ask mobile game ranked 20th in the best-selling list of Appstore games. As a mobile game product that has been online for nearly six years, it still maintains good vitality. In addition, the agency products “Moore Manor”, “eight wastelands of ghost Valley (PC version)” and “underground castle 3: poem of the soul” launched during the year contributed revenue. However, due to the impact of the amortization cycle of props and the accounting recognition rules of R & D share, no financial profit has been generated at present.
Unamortized recharge and props grow rapidly, and will be gradually recognized as income and profit in the future. As of December 31, 2021, the company’s unamortized balance of recharge and props totaled 726 million yuan, an increase of 404 million yuan over the end of 2020, including 307 million yuan of consumable props and recharge balance and 97 million yuan of permanent props. It is expected that with the consumption of various recharge and props, this part will be gradually recognized as income and profit, which will promote the growth of the company’s performance in 2022.
Rich reserves of new products. The company’s reserved agent products with edition numbers include Obi Island: dream country, dawn elite, Hualuo Chang’an, lost four territories, projectg (code), ancient treasure, etc. in addition, there are also product reserves such as store legend, projects (code), Fengshen fantasy world, rhythm track, Shendu kitchen king, etc. Among them, the agent product Obi Island: dream country, which obtained the version number, is derived from the page tour Obi Island launched in 2008. It has an IP user group, and the number of reservation users on the whole platform of mobile game is about 5 million.
Actively expand overseas markets. The company started from transplanting Chinese mature products and initially opened the overseas market. In the future, it will increase investment in the overseas market. At present, the company has approved self-developed products to position the global market and quickly layout overseas. In 2021, the company released products such as “ghost Valley eight wastelands (PC version)”, “Ilona”, “stay cute Knight”, “Yinian Xiaoyao (Hong Kong, Macao and Taiwan version)” and so on overseas. In addition, there are many products based on the overseas market, such as Yinian Xiaoyao (overseas version), store legend, underground castle 3 (overseas version), wonderful Combatant (overseas version), Kingdom inheritance (overseas version), etc.
Continue to maintain a high proportion of dividends. In 2021, the company distributed cash dividends of 160 yuan (including tax) to all shareholders for every 10 shares. Based on the closing price of 373.55 yuan on April 7, 2022, the dividend rate was about 4.28%. The accumulated profit distribution amount was 1.15 billion yuan, accounting for 78.30% of the company’s total profit in 2021. The company’s accumulated dividend from 2017 to 2021 was 3.571 billion yuan, accounting for 76.7% of the company’s total net profit attributable to the parent company in the same period.
Investment advice and profit forecast: products such as “Yinian Xiaoyao” and “ask for a hand tour” have verified the company’s self-research and long-term operation ability. The newly approved products are positioned in the global market and further expand the income space in overseas markets. As of December 31, 2021, the company’s contract liabilities were 585 million yuan, an increase of 306 million yuan compared with the end of 2020. At the same time, there was 726 million yuan of unamortized recharge and props balance, which is expected to be gradually transformed into income and profit. It is estimated that the company’s EPS from 2022 to 2024 will be 23.11 yuan, 26.48 yuan and 30.05 yuan respectively. According to the closing price of 373.55 yuan on April 7, the corresponding PE will be 16.17 times, 14.10 times and 12.43 times, maintaining the “buy” rating.
Risk tip: the risk of core personnel loss under the talent war in the game industry; Long term suspension of edition number; The flow of old games fell more than expected; The online progress and market performance of the new game are less than expected; Overseas products performed less than expected
