\u3000\u3 China Vanke Co.Ltd(000002) 624 Perfect World Co.Ltd(002624) )
Events
On April 14, the company released the performance forecast of 21y and 22q1. It is expected that 21q4 will achieve a revenue of 1.78 billion yuan, a decrease of 17.8% and 29.8% respectively; 22q1 realized a net profit attributable to the parent company of RMB 830850 million, an increase of 78.8% – 83.1% at the same time, and a net profit of RMB 400420 million after non deduction, an increase of 25.7% – 32.0% at the same time.
Key investment points
The revenue and profit of 21q4 decreased, mainly due to the mismatch of input-output cycle and one-time cost. 21q4 company realized a revenue of 1.78 billion yuan, a decrease of 17.8% and 29.8% respectively. We believe that one of the main reasons for the significant year-on-year and month on month decline of the company’s 21q4 revenue end is the natural decline of the stock game flow. 21q4 company has only one important product “magic tower” launched, and the public beta date of magic tower is close to the end of the quarter, and the revenue will be deferred. Therefore, it makes little contribution to 21q4 revenue. Most of the revenue is contributed by stock games, and there is natural attenuation. 21q4 company realized a net profit attributable to the parent company of -429 million yuan, a decrease of 66.2% at the same time. We believe that there are two main reasons for the sharp year-on-year decline in profit: 1) the one-time expenses caused by equity incentive and some personnel adjustment are concentrated; 2) The marketing expenses of “magic tower” and other products are concentrated in 21q4.
The profit of 22q1 improved significantly, and increased by about 26% – 32% after deducting non profits. The revenue of magic tower gradually released 22q1, and the company realized a net profit attributable to the parent company of 830850 million yuan, an increase of 78.8% – 83.1% at the same time. The net profit after deducting non profit was RMB 400420 million, an increase of 25.7% – 32.0% at the same time. We think this is because the income of magic tower is gradually released in 22q1. The first month of magic tower is nearly 500 million yuan, which will be reflected in 22q1-2, and most of the early marketing expenses have been accrued, which has greatly improved the overall profitability of 22q1.
At present, the next stage of the company’s reserve is 11
At present, the company mainly reserves 11 games, including 8 mobile games and 3 end games. Its overseas business will focus on “Chinese products going to sea + overseas localization development”. 1) In terms of reserved games, according to the company’s announcement, the mobile games currently reserved by the company include “black cat anecdote society”, “Tianlong Babu 2”, “Kingdom of morning and night”, “one punch Superman: the world”, “million King Arthur”, “Zhuxian 2”, “perfect Shanghai New World Co.Ltd(600628) ,” Shenmo mainland 2 “, and the end games include” Zhuxian world “,” perfect new world “,” have a nice death “. In addition, the well-known IP such as” spirit cage “and” Fengshen “series are also in the preparatory stage. 2) In terms of going to sea, the company will focus on the two dimensions of “Chinese products going to sea + overseas localization development” to develop the overseas market. From the perspective of Chinese products going to sea, the company will test or launch “dream new kill immortal” and “magic tower” in many overseas places this year. At present, the reserved products are more suitable for overseas markets than ever before. For example, “one punch Superman” and “million King Arthur” are IP with a high degree of internationalization. The company’s Chinese products going to sea will gradually transition from authorized third-party distribution to independent distribution. From the perspective of overseas localization development, the corresponding distribution team of the company has been in place in terms of structure and personnel. With the maturity of the strategy of “Chinese products going to sea + overseas localization development”, the overseas business is expected to enter a new growth stage.
Investment advice
We believe that the company will step out of the pain of strategic adjustment and usher in a new stage of development in the future. In the past 21 years, the company has tried some new product categories, determined the future development direction, and disbanded some overseas teams with poor profitability, resulting in certain expenses. Therefore, the profit side is greatly affected. At present, the company has established a new strategy of “Chinese products going to sea + overseas localization development”. We believe that high-quality MMORPG / ARPG games such as Perfect World Co.Ltd(002624) , “magic tower” and so on have a certain prospect of going to sea. It is estimated that the company’s revenue will be 8.52/10/12.3 billion yuan in 21-23 years, with a year-on-year change of – 16.7% / 17.9% / 22.2%; The net profit attributable to the parent company is RMB 371 / 19.6 / 2.26 billion, with a year-on-year change of – 76.0% / 429% / 15.3%. The corresponding P / E of the current stock price is 69.0 / 13.0 / 11.3 times. We give a valuation of 15 times in 22 years, corresponding to the target price of 15.2 yuan, 19.1% more room than the current stock price, and give a “buy” rating.
Risk tips
The risk that the version number policy is lower than expected, such as the number of version numbers granted each year is lower than expected, and the limitation of version number category is lower than expected; Geopolitics brings business risks to the sea, such as the game being taken off the shelf as a whole; Overseas business development is less than expected; Risk of failure of potential popular products, etc.
