\u3000\u3 Shengda Resources Co.Ltd(000603) 444 G-Bits Network Technology(Xiamen)Co.Ltd(603444) )
[key points of investment]
New and old games jointly promote high income growth, and self-developed Games contribute significantly to profits. In 2021, the company achieved an operating revenue of 4.62 billion, a year-on-year increase of 68.4%, and the net profit attributable to the parent company was 1.47 billion, a year-on-year increase of 40.3%, benefiting from the brilliant performance of games such as Yinian Xiaoyao and Moore Manor. In the fourth quarter, the company achieved an operating revenue of 1.13 billion, a year-on-year increase of 63.7%, and the net profit attributable to the parent company was 263 million, a year-on-year increase of 4.5%, mainly due to the large online marketing investment of Yinian Xiaoyao (Hong Kong, Macao and Taiwan) in October. Considering that the company’s contractual liabilities increased by 90 million month on month in the fourth quarter, the net cash flow from operating activities in the fourth quarter increased by 45.6% year-on-year, and the growth is still strong. In terms of R & D and issuance, the net profit attributable to the parent company at the issuance end was 710 million, a year-on-year decrease of 0.4% (the issuance end includes 40% minority shareholders’ equity); The net profit attributable to the parent company at the R & D end was 740 million, with a year-on-year increase of 57.9%. As a self-developed game, Yinian Xiaoyao made a significant contribution. At the same time, “Yinian Xiaoyao” has a large marketing investment, promoting the sales expense rate to 27.6%, an increase of 16.7 percentage points.
“Asking questions” mobile game reached a new high, and “Yinian Xiaoyao” contributed the main increment. In terms of games (revenue contribution of each game is obtained through cost analysis): in 2021, the end game of “asking questions” contributed 360 million revenue, with a year-on-year increase of 39%, benefiting from the launch of wegame platform in March, which brought some new users and some old users back. “Ask” mobile game has contributed about 2 billion yuan in revenue. This year, it has strengthened marketing and promotion, and its revenue has increased slightly. As a mobile game that has been online for five years, its overall performance is very stable. “Yinian Xiaoyao” contributed about 1 billion in revenue, ranking 11th on average in the best seller list of app store in 2021, up to 5th, which shows G-Bits Network Technology(Xiamen)Co.Ltd(603444) R & D strength. Moore Manor contributed about 370 million revenue and added 30 million users in the first month. Affected by the amortization cycle of props and the accounting recognition rules of R & D share, it had not generated financial profit by the end of the period. During the reporting period, the company’s self research and agency business maintained rapid growth.
Products are differentiated and commercialized, and overseas business is worth looking forward to. At the R & D end, by the end of 2021, the company had 530 R & D personnel, with an average salary of 1.15 million. In terms of R & D strategy, adopt rapid iteration, focus on MMO, SLG and hang up categories, and increase overseas investment (new projects can be approved only after they are positioned in overseas markets). In terms of distribution strategy, adhere to the high-quality line, create products with both differentiation and commercialization, adhere to long-term operation, and realize the integration of quality and efficiency. In addition, since 2019, the company has begun to explore the IP incubation of online novels and explore a new path of IP operation. Core works such as 13 mink street and the manual of technologists have performed well. The company has been working overseas for many years, and has successfully released a variety of products such as the strongest snail (Hong Kong, Macao and Taiwan version) and Yinian Xiaoyao (Hong Kong, Macao and Taiwan). Its contribution to the overseas market in the future is worth looking forward to.
[investment suggestions]
We believe that the company is a very scarce company in the market, which takes into account the high-quality R & D and long-term operation ability. Its “ask” series games maintain an ultra long life cycle and are enduring. The success of Yinian Xiaoyao also proves the company’s multi category R & D ability and tamps the self-research matrix. In the future, the overseas market will also become an important growth point of the company’s revenue and profit. Combined with the current operating conditions of the company, we raised the revenue and profit forecast for 20222023 and introduced the profit forecast for 2024. It is estimated that the operating revenue of the company from 20222024 will be 5.46/62.2/7.1 billion, the net profit attributable to the parent company will be 1.70/19.4/22.2 billion, the corresponding EPS will be 23.7/27.0/30.9 yuan, and the PE will be 16 / 14 / 12 times respectively. Maintain the “overweight” rating.
[risk tips]
Macroeconomic downside risk;
Policy supervision risk.
