\u3000\u3 Shengda Resources Co.Ltd(000603) 444 G-Bits Network Technology(Xiamen)Co.Ltd(603444) )
Event: G-Bits Network Technology(Xiamen)Co.Ltd(603444) released the annual report of 2021, which realized an operating revenue of 4.619 billion yuan (+ 68.4%) and a net profit attributable to the parent company of 1.468 billion yuan (+ 40.3%).
Comments:
The self-developed “Yinian Xiaoyao” has driven the company’s revenue to increase significantly, showing the effectiveness of the “bottom-up” R & D mechanism. In 2021, the company achieved a revenue of 4.619 billion yuan, a year-on-year increase of 68.4%, of which the independent operation revenue was 2.039 billion yuan, a year-on-year increase of 70.2%; The joint operation was 2.181 billion yuan, a year-on-year increase of 83.2%; The authorized operation was RMB 336 million, a year-on-year increase of 39.0%. The substantial growth of revenue from independent operation and joint operation is mainly due to the main incremental revenue contributed by the new launch of “Yinian Xiaoyao” in February 2021, and some incremental revenue contributed by new products such as Moore Manor, eight wastelands of ghost Valley (PC version), underground castle 3: poem of the soul and so on. “Yinian Xiaoyao” is a self-developed and operated ink painting national style hand tour for cultivating immortals. It has won more than 330000 five-star praise in the app store, ranking 11th on average in the best-selling list of games in the app store, up to No. 5 in the list; And won the awards of “best independent game” in the game diamond list in 2020 and “best domestic game” in the game diamond list in 2021. The success of the self-developed product “Yinian Xiaoyao” shows the effectiveness of the company’s “bottom-up” product R & D mechanism, and the experience will be reused for the company’s R & D of other game categories. The rapid growth of authorized operation stems from the continuous content version iteration of the end game of “ask” and the launch of wegame platform in March 2021. From the perspective of new product reserve, a number of agent products reserved by the company have obtained game version numbers and rich game types, which may be launched in 2022. Among them, “Obi Island: dream country” mobile game is an IP community development game with feelings, which has obtained the version number; “Dawn elite” mobile game is a 2droguelike shooting game, which has obtained the version number and global authorization; Shopheroes legends is a simulated business game based on equipment forging and store management, which has not yet obtained the version number and global authorization; “Flowers fall in Chang’an” is an RPG mobile game with ancient palace theme, which has obtained the edition number; “Lost four realms” is a two-dimensional adventure RPG mobile game with Oriental fantasy theme, which has obtained the edition number.
The increase of sales rate is due to the increase of marketing model innovation and investment, and some contract liabilities are expected to be transformed into 2022 performance. In 2021, the gross profit margin of the company’s main business was 84.9%, which was stable compared with the same period; The sales expense was 1.274 billion yuan, with a sales expense ratio of 27.6%, an increase of 16.7 percentage points year-on-year; The management fee was RMB 284 million, with a management fee rate of 6.1%, a year-on-year decrease of 2.5 percentage points; The R & D expenditure was 609 million yuan, with a R & D expenditure rate of 13.2%, a year-on-year decrease of 2.5 percentage points; The net profit attributable to the parent company was 1.468 billion yuan, a year-on-year increase of 40.3%. The sharp increase in the company’s sales expense rate this year is mainly due to the launch of many new games such as “Yinian Xiaoyao” and “Moore Manor”. The company has increased marketing and advertising promotion. Among them, the new simulated leisure tour “Moore Manor” awakened IP users through content delivery, brand publicity, community operation and other means, forming a better effect of user self communication and breaking the circle, with more than 30 million new users in the first month; “Yinian Xiaoyao” continues to expand the user base through buying volume and other ways. In the buying volume, it continues to launch creative materials in combination with fast iterative game content. Through the innovation of marketing methods, it significantly improves the user touch rate and conversion rate, realizes the synergy of quality and efficiency, and brings efficiency with products. On the other hand, influenced by the amortization cycle of props and the accounting recognition rules of R & D share, products such as Moore Manor, underground castle 3: the poem of the soul and the world ejection story have not generated financial profits by the end of 2021; According to the company’s annual report, as of the end of 2021, the company’s unamortized balance of recharge and props totaled 726 million yuan, an increase of 404 million yuan over the end of the previous year. We believe that some contract liabilities are expected to be converted into income statement performance in 2022.
The overseas market has initially opened and is expected to become a new growth pole of the company. In 2021, the company’s overseas revenue (including Hong Kong, Macao and Taiwan) was 138 million yuan, a year-on-year increase of 46.6%, accounting for 3.0% of the total revenue. Overseas revenue mainly comes from the company’s successful overseas release of products such as ghost Valley eight wastelands (PC version), ELONA (Ilona), ezknight (cute Knight), Yinian Xiaoyao (Hong Kong, Macao and Taiwan version) this year. Among them, the cumulative number of registered users of furysurvivor (doomsday hope) exceeds 5.2 million, the underground castle (overseas version) and underground castle 2 (overseas version) perform well, and other online projects continue to operate stably. In addition, the reserved products include Yinian Xiaoyao (overseas version), shopheroes Legends (store legend), underground castle 3 (overseas version), wonderful Combatant (overseas version), Kingdom inheritance (overseas version), etc. In addition to transplanting Chinese mature online products overseas, the company clearly requires that self-developed products must be positioned in the overseas market before they can be approved, and the company will continue to attract excellent producers and distribution teams with deep insights into overseas culture to quickly layout the overseas market. We believe that the company has been in overseas markets for many years. At present, the company has accelerated the expansion of overseas markets, and overseas is expected to become a new growth pole of the company.
Profit forecast and rating: the company adheres to the high-quality line, and the “bottom-up” R & D mechanism shows its effectiveness and reusability. We are firmly optimistic about the company. It is estimated that the net profit attributable to the parent company from 2022 to 2024 will be 1.909 billion yuan, 2.203 billion yuan and 2.545 billion yuan respectively, corresponding to the existing share price PE of 14x, 12x and 10x respectively, maintaining the “strongly recommended” rating.
Risk tips: (1) the new game failed to go online as scheduled; (2) The flow of mature products decreased sharply; (3) Game regulatory policy changes.
