\u3000\u3 China Vanke Co.Ltd(000002) 624 Perfect World Co.Ltd(002624) )
Core view:
Event Perfect World Co.Ltd(002624) released 2021 performance express and 2022q1 performance forecast: the company’s performance in 21 years was in line with the previous performance forecast. In 2021, the company achieved an operating revenue of 8.518 billion yuan, a year-on-year decrease of 16.69%; The net profit attributable to the parent company was 371 million yuan, a year-on-year decrease of 76.03%; The net profit deducted from non parent company was 104 million yuan, a year-on-year decrease of 90.07%. In 2022q1, the company expects to realize a net profit attributable to the parent company of RMB 830850 million, with a year-on-year increase of 78.79% – 83.09%; The net profit deducted from non parent company was RMB 400420 million, with a year-on-year increase of 25.71% – 31.99%.
The strategic upgrading of the game business carries a heavy burden on the performance. The company actively embraces market changes and actively promotes the strategic upgrading and product iteration of the game business, so that the company’s short-term performance encounters periodic pressure. In 2021, the company’s game business realized an operating revenue of 7.421 billion yuan, a year-on-year decrease of 19.77%; The net profit attributable to the parent company of the game business was about 720 million yuan, a year-on-year decrease of 68.48%, which was better than the performance forecast. Mainly because the company shut down some overseas game projects whose performance did not meet expectations in the second quarter of 2021, resulting in a one-time loss of about 270 million yuan. From the perspective of product end, the income of end game products is basically the same, and some mobile games flow naturally decreases with the life cycle. In terms of new tours, the company has launched a total of 5 novice tours in 21 years, among which “dream new kill immortal” has performed well. Since its launch in 2021, the cumulative flow revenue from the end of the year is nearly 1.6 billion yuan; The early marketing investment of Ares remains is large, and the performance is less than expected; The launch of the heavy product “magic tower” mobile game was delayed compared with the scheduled time, resulting in the profit contribution brought by “magic tower” not fully reflected in the reporting period.
The overseas epidemic repeatedly affected the income of film projects. The film list confirmed a large loss. In 2021, the company’s film and television business realized an operating revenue of about 95200 yuan, an increase of 1.84% year-on-year; The net loss was about 199 million yuan, a decrease of 58.83% over the previous year. In 2016, the company’s fund signed a single film investment and strategic cooperation agreement with universal pictures to make a long-term investment in about 50 films. At present, only two films have not been released. Due to the repeated overseas epidemics, the income of some film projects was lower than expected. In 2021, the loss caused by the decline of fair value caused by universal film’s single investment was about 386 million yuan. According to the company’s proportional share in the fund, the net profit attributable to the parent decreased by about 273 million yuan.
Q1’s performance is on track, and the transformation and upgrading has achieved initial results. In 2022q1, the company’s game business is expected to achieve a net profit of 850870 million yuan, a year-on-year increase of 98.95% – 103.63%; During the reporting period, the mobile game Perfect World Co.Ltd(002624) : Battle of the gods was officially launched, and magic tower contributed good performance. In addition, the company’s transaction of selling U.S. R & D studios and relevant local distribution teams in Europe and the United States was completed in the first quarter of 2022, and the non recurring income was confirmed to be about 400 million yuan. The net profit of the game business after deducting non recurring profits and losses was about 440460 million yuan, a year-on-year increase of 32.84% – 38.87%. 2022q1 company’s film and television business performed well. During the reporting period, the film and television business is expected to achieve a net profit of about 20 million yuan, mainly due to the good performance of the company’s high-quality TV dramas such as “there were glazed tiles in the past” in the market. “Magic tower” has a brilliant performance. It is expected to be released globally. The company independently developed the two-dimensional open world mobile game “magic tower” and officially put it into public beta on December 16, 21. After the game was launched, it ranked first in the Appstore free list and dominated the list for six consecutive days. In the first month, it achieved the results of more than ten million new users and more than 500million yuan of streaming water. Magic tower will also be tested in many overseas places in the near future. It is expected to be officially launched in Q3 in 2022 and gradually enter the profit recovery period.
The company has abundant reserves of game items, focusing on the two tracks of “MMO +” and “card”. At present, the company’s reserve game items include “black cat anecdote society”, “Tianlong Babu 2”, “one punch Superman: the world”, “million King Arthur”, “the Kingdom of morning and night”, “Zhuxian 2”, “perfect Shanghai New World Co.Ltd(600628) ” and so on. Among them, “black cat anecdote society” and “one punch Superman: the world” have entered the testing stage.
Investment suggestion at present, the company is in a critical period of development strategy transformation and new and old kinetic energy transformation, and its performance is under certain pressure. However, the company has strong R & D strength and category advantages. We are optimistic about the company’s dual track development in the Chinese and foreign markets in the future. At present, the version number has been reissued, and the company has rich reserves. It is expected that a large number of new tours will be officially launched after obtaining the version number, and the performance is expected to be repaired. We expect that the net profit attributable to shareholders of listed companies from 2022 to 2023 will reach RMB 1.896/23.14/2.636 billion, with a year-on-year increase of 41.92% / 22.04% / 13.88%, corresponding EPS of 0.98/1.19/1.36 and PE of 11.93x/9.77x/8.58x respectively, maintaining the “recommended” rating.
Risk tips: market competition intensifies, industrial policies become stricter, the launch of new products is less than expected, the running water of games is less than expected, the loss of core talents, the income of film and television works is less than expected, etc.
