[ChinaLink]] last week, NASDAQ index fell 2.63%, MSCI China Index fell 1.34%, Hang Seng Index fell 1.62% and Hang Seng technology index fell 2.32%. The top three components of Hang Seng technology index rose: Haier Smart Home Co.Ltd(600690) (+ 10.95%), Ctrip group-s (+ 4.57%), Wanguo data-sw (+ 3.54%); The top three decline: Shang Tang -W (-12.62%), Kwai -W (-9.32%), Lenovo Group (-8.82%).
[A shares] last week, the media sector index fell 6.46%, the Shanghai Composite Index fell 1.25%, the Shenzhen Component Index fell 2.60%, and the gem index fell 4.26%. The top three gainers of the sector: Hangzhou Onechance Tech Corp(300792) (+ 4.57%), China stock market news (+ 3.10%), and Songcheng Performance Development Co.Ltd(300144) (+ 1.55%); The top three declines in the sector: Three’S Company Media Group Co.Ltd(605168) (- 26.05%), Visual China Group Co.Ltd(000681) (- 21.00%), Bluefocus Intelligent Communications Group Co.Ltd(300058) (- 20.10%).
Company news:
[Kwai -W] fell 9.32% last week, mainly due to People.Cn Co.Ltd(603000) ‘s continuing coverage of minors’ addiction to short video related news, leading to a rising market concern over short video surveillance. And the reduction of some PE shareholders in the early stage. We believe that the youth mode of short video has been launched, and the impact of relevant protection measures on the income of the platform is extremely limited, so there is no need to worry too much; The reduction of primary market investors is also a normal behavior in line with the investment return cycle, which is not optimistic about the fundamentals of the company. We still optimistic about the logic of Kwai Fu’s continuous loss reduction and efficiency improvement and the improvement of business mode in the case of continuous traffic flow.
[JD] sent 3246 express personnel from all over the country to support Shanghai Baogong in batches. Shanghai citizens have begun to receive JD’s shipments one after another. On April 15, the number of orders completed by jd.com in Shanghai increased by 67% compared with the previous day, reaching 43% of the average daily volume before the epidemic, which is expected to recover to about 80% next week.
[Anta] the company released the operation performance of 22q1. The flow of Anta brand increased by 10-20%, FILA increased the number of units, and other brands increased by 40-45%.
[ Perfect World Co.Ltd(002624) ] Perfect World Co.Ltd(002624) disclosed that the performance forecast of the first quarter was in line with the market expectation. The net profit attributable to the parent in 22q1 was 830 ~ 850 million yuan, yoy + 78.79% ~ 83.09%, and the deduction of non attributable 400 ~ 420 million yuan, yoy + 25.71% ~ 31.99%. Among them, 22q1 sold the U.S. R & D studio and relevant local distribution teams in Europe and the United States. The delivery was completed in 22q1 and the non recurring income was confirmed to be about 400 million yuan. After deduction, the net profit of non deduction from the game business is about 440 ~ 460 million yuan, yoy + 32.84% ~ 38.87%. Compared with the non deduction, the film and television business 22q1 has a certain loss recognized.
[ Three’S Company Media Group Co.Ltd(605168) ] Three’S Company Media Group Co.Ltd(605168) disclosed the first quarterly report, which was in line with the previous expectations. The company achieved a revenue of 895 million yuan, a year-on-year increase of 58.83%; The net profit attributable to the parent company was 60.14 million yuan, a year-on-year increase of 13.07%; Deduct non net profit of 58.91 million yuan, with a year-on-year increase of 11.39%.
Viewpoint:
[overseas] last week, the overall market showed a trend of opening low and going high. On Monday, the market was still dominated by the epidemic factors in Shanghai. The statement that some manufacturing enterprises may face shutdown made the market worry about the impact of the epidemic spread from downstream consumption and service industry to upstream supply chain and manufacturing industry. Both A-Shares and H shares fell sharply. However, the release of the game version number on Monday night after an interval of eight months made the market more confident in the slowdown of the supervision of the Internet industry. At the same time, the news that the epidemic prevention policy may change came from the market on Tuesday, resulting in a large rebound in the market. In the following days, the introduction of relevant consumption stimulus policies and the expectation of reducing the standard made the market sentiment continue to recover. The sector represented by consumption and offline service industry became the most active sector under the expectation of reopen, and Hong Kong stock consumer Internet companies also performed steadily.
We believe that in the context of reopening, we should pay attention to the significant opportunity for the performance recovery of consumer Internet companies. Meituan’s takeout, store to store, new retail business and JD’s logistics system have been greatly challenged by the recent epidemic prevention and control, and the single volume has declined greatly. We believe that referring to the history of 2020, it is expected that the order volume of meituan and JD’s businesses will rebound sharply after the closure measures are lifted, and the company’s performance is expected to be repaired in the second quarter. JD’s delivery problem in Shanghai has been gradually solved, and the order volume has begun to recover rapidly; It is expected that meituan’s takeout brother will also quickly restore transportation capacity after unsealing, resulting in a rebound in orders.
In the long run, the epidemic further highlights the excellent ability of meituan, jd.com and other enterprises in solving the “last mile” and their extreme importance in ensuring supply and people’s livelihood. Subtle changes are also taking place in the attitude of relevant regulatory authorities towards these enterprises. Recently, several documents of the central government have stressed the importance of building a unified national market and building a strong logistics system and cold chain system. We believe that meituan, JD and other enterprises willing to continuously invest in logistics and supply chain will be further encouraged.
At the same time, from the perspective of consumers, in addition to further catalyzing consumers’ mentality of using self operated e-commerce, o2o new retail platform, community group purchase and other new formats to buy vegetables and shopping, this epidemic also highlights the vulnerability of the traditional accessible e-commerce express system, which is difficult to meet consumers’ immediate needs for fresh and daily FMCG under the state of epidemic prevention and control. We believe that meituan, jd.com and other enterprises focusing on real-time retail will further take advantage of their logistics speed to enable consumers to transfer more consumer demand for fresh food and daily necessities to the local real-time retail platform. According to the calculation of meituan business analysis team, it is expected that the scale of the real-time retail market will reach more than 700 billion by 2025. We expect the overall fresh and FMCG e-commerce market to reach 7 trillion, and meituan, JD and other enterprises will gain an important share in this market.
We recently released a 74 page meituan in-depth report: “meituan-w (3690. HK): the” search engine “of local life and” three curves “connecting the past and the future”, which makes an in-depth analysis of the growth space and profit prospects of meituan’s businesses, and briefly discusses the development trend of fresh e-commerce industry. We will also make more in-depth research on Kwai Fu, Jingdong and other enterprises, and pay close attention to the industry trends and the company’s development trend in the Internet field.
We still suggest to grasp the investment opportunities of five main lines this year: 1. Mesozoic consumer Internet companies with good performance growth and strong long-term competitiveness: meituan-w (3690. HK) and jd-w (9618. HK); 2, short video platform with quick loss reduction, clear business model and continuous valuation suppression: Kwai -W (1024.HK); 3. The performance and valuation are still at the bottom. Wait patiently for the industry leading companies on the right: Tencent (700. HK) and Alibaba WS (9988. HK); 4. High quality companies with stable performance growth and profit margin and relatively cheap PE: Netease SW (9999. HK) and pinduoduo (PDD. US); 5. Companies with greater flexibility after the release of the game version number: heart company (2400. HK), bilibili-w (9626. HK).
[consumption related] since January, we have clearly prompted the theme opportunity of [sports sector / sports equipment], and are optimistic about the investment opportunity of [Anta, Li Ning, Tebu, 361 degrees] after the national epidemic repair in May. Under the influence of the epidemic situation, [Anta] company released the operation performance of 22q1. The flow of Anta brand increased by 10-20%, the number of units in FILA increased by 40-45%, and other brands increased by 40-45%; [Tebu international] the retail sales (including Wuxi Online Offline Communication Information Technology Co.Ltd(300959) ) of Tebu’s main brand 22q1 increased by about 30-35%, the retail discount was about 75%, and the retail inventory turnover was about 4 months. On the one hand, 22q1 continued the month on month improvement trend, on the other hand, it performed well in various sports brands. [ Shuhua Sports Co.Ltd(605299) ] on April 6, it was announced that the first phase of the employee stock ownership plan raised 22 million yuan, and the transfer price was no less than 90% of the average repurchase price. Therefore, it was proposed to repurchase shares, and the repurchase price was no more than 19 yuan / share. In addition, [ China Sports Industry Group Co.Ltd(600158) , Shanghai Yaoji Technology Co.Ltd(002605) ], etc. The weekly report in the early stage of generation Z consumption continues to suggest that [bubble Mart] is at a low valuation and has a certain recovery in the near future. The leading performance in the period of industry integration is stable. We pay attention to the long-term layout of Hong Kong consumer stocks. [ Focus Media Information Technology Co.Ltd(002027) ] 22q1 has performance pressure, but it is optimistic about the drive of consumption repair and long-term logic.
[yuancosmos] the “global yuancosmos conference” hosted by China Mobile Communications Federation and co sponsored by Shanghai Communications Administration was originally scheduled to officially land in Shanghai on March 31. The latest news is that affected by the Shanghai epidemic, it was rescheduled to be held online on May 20. [NFT] on March 14, the finance minister of Singapore announced the Levy of NFT tax; In March, Xinhuanetco.Ltd(603888) and Shanghai Cultural Property Exchange jointly launched the “national copyright trading protection alliance chain”, which incorporated digital cultural creation into the national digital cultural creation normative governance ecological matrix and the digital cultural property rights registration and circulation system; The official account of Tencent in March 30th responded that according to the relevant laws and regulations of the state, in order to prevent the risk of speculation in virtual currency transactions, the WeChat public platform has recently standardized the public numbers and small procedures of the two hype and the sale of digital collections in recent days; and, in response to the relevant laws and regulations of WeChat, On April 8, China’s NFT participants began to launch the “2022 China Digital Collection self discipline Convention” conference led by the new generation AI industry technology innovation strategic alliance, Hongdong digital collection, dongyiyuandian, Lingjing collection and other sponsors; On April 13, China Internet Finance Association, Bank Of China Limited(601988) Industry Association and China Securities Industry Association jointly called on member units to jointly launch initiatives, including “protecting the intellectual property rights of underlying commodities”, “preventing prices from deviating from the basic law of value”, “Resolutely Curbing the tendency of NFT to finance and securitize”, etc. the market had a certain impact on the investment sentiment of NFT related stocks. Last week Three’S Company Media Group Co.Ltd(605168) (- 26.05%) Visual China Group Co.Ltd(000681) (- 21.00%), Bluefocus Intelligent Communications Group Co.Ltd(300058) (- 20.10%) led the decline. We think there is no need to worry too much and propose to clarify the value of NFT in protecting intellectual property rights and its attitude of supporting culture. On March 25, the Ministry of industry and information technology was still collecting materials for industrial culture digital collections. Focus on NFT’s core targets: Three’S Company Media Group Co.Ltd(605168) (we released our first coverage report on March 20 and continue to be optimistic about the performance certainty of serving state-owned enterprises), Visual China Group Co.Ltd(000681) (focus on the recent launch of NFT overseas platforms), etc. [VraR] after the investment, Pico’s expected shipment in 2022 will increase to 1.8 million units through marketing and other support. Focus on the core target of metauniverse content: Wuhu 37 Interactive Entertainment Network Technology Group Co.Ltd(002555) , Wuxi Boton Technology Co.Ltd(300031) (game version number flexibility, industrial Internet Catalysis), Fuchun Technology Co.Ltd(300299) , Kaiser (China) Culture Co.Ltd(002425) , Shanghai Fengyuzhu Culture Technology Co.Ltd(603466) (performance flexibility after epidemic repair), Saturday Co.Ltd(002291) (Kong Xiang and Jia Nailiang live broadcast on April 8, and Master Yu and his virtual person Zhou Xiaoyu live broadcast on April 17 with goods), etc. [counting from the east to the West] Zhejiang Century Huatong Group Co.Ltd(002602) (the mobile Tour “Celebrating the past years” was launched on March 25).
[games] on the evening of April 11, the State Press and Publication Administration announced the approval information of domestic online games in April, with a total of 45 games, which met the continuous tips of our previous weekly report and comments. After the release of the edition number, some game stocks were adjusted due to the market game factors. Last week, the performance of leading game stocks [ Perfect World Co.Ltd(002624) (+ 1.52%), Wuhu 37 Interactive Entertainment Network Technology Group Co.Ltd(002555) (- 3.87%), G-Bits Network Technology(Xiamen)Co.Ltd(603444) (- 6.23%) and Xinxin company (- 5.35%)], but we did not change the previous logic and continued to be optimistic about the bottom of the game sector. We compared the historical valuation of Tencent. We gave the central target of the sector valuation 22 years 20x, and focused on who can get the edition number in the second round of market, Who can push the game online as soon as possible to create new performance flexibility? The launch of head products can bring 10 ~ 30% EPS flexibility to the company. The valuation anchor points are giants [Tencent (22x in 22 years) and Netease (20x in 22 years)], which continue to give priority to [ Wuhu 37 Interactive Entertainment Network Technology Group Co.Ltd(002555) , Perfect World Co.Ltd(002624) , heart, G-Bits Network Technology(Xiamen)Co.Ltd(603444) ], etc. Tencent (one of the highlights of 21q4 game going to sea); Netease (Harry Potter goes online overseas, pay attention to Diablo Q2 goes online) Wuhu 37 Interactive Entertainment Network Technology Group Co.Ltd(002555) (the performance in 21 years was in line with the expectation, and the performance of Xinyou at sea in February 22 was brilliant. Douluo continent: duel between soul masters entered the payback period) G-Bits Network Technology(Xiamen)Co.Ltd(603444) (I read carefree and asked 22q1 performed brilliantly, acting as the online agent of OBI Island: dreamland for 22 years) Zhejiang Century Huatong Group Co.Ltd(002602) (“counting East and counting West” starts catalytic IDC, and game distribution cooperates with Tencent) Wuxi Boton Technology Co.Ltd(300031) (Industrial Internet, smart mine and other business flexibility, pay attention to the implementation of self-developed final front) Perfect World Co.Ltd(002624) (the new version of magic tower linked with spirit cage and launched overseas in 22 years); Heart company (flash Party’s overseas release performance is outstanding, and T3 22q1’s overseas launch is expected) Shanghai Yaoji Technology Co.Ltd(002605) (Yaoji fishing 3D launched its new tour in December 21, and the star card track has become a new growth point); Baiao family interaction (Obi Island: dreamland launched in 22 years), etc.
① the quarterly performance of the tour to the mainland is expected to achieve a year-on-year growth of 500%, and the performance of the tour to the mainland is expected to exceed the year-on-year growth base; ② G-Bits Network Technology(Xiamen)Co.Ltd(603444) : the annual report shows more qualitative growth, and the 22q1 data of “asking questions” and “Yinian Xiaoyao” are outstanding; The performance of other game stocks, such as our prompt from January, is under certain pressure due to the suspension of edition numbers and the reduction of new tours; ③ Perfect World Co.Ltd(002624) : 22q1 net profit attributable to parent: 830850 million yuan, yoy + 78.79% ~ 83.09%, deduct 400420 million yuan, yoy + 25.71% ~ 31.99%. On March 17, 2022, the mobile game “magic tower” was launched in the overseas market simultaneously, and the mobile game will be tested in many overseas places in the near future. ④ Three’S Company Media Group Co.Ltd(605168) : the company achieved a revenue of 895 million yuan, an increase of 58.83% year-on-year; The net profit attributable to the parent company was 60.14 million yuan, a year-on-year increase of 13.07%; Deduct non net profit of 58.91 million yuan, an increase of 11.39% year-on-year; ⑤ Others: Beijing Yuanlong Yato Culture Dissemination Co.Ltd(002878) , Beijing Jetsen Technology Co.Ltd(300182) , Saturday Co.Ltd(002291) (see comments on April 14 for details), etc.
