[ChinaLink] last week, the NASDAQ index fell 3.83%, MSCI China Index fell 6.83%, Hang Seng Index fell 4.09% and Hang Seng technology index fell 7.38%. The top three components of Hang Seng technology index rose: Lenovo Group (+ 0.00%), ASM The Pacific Securities Co.Ltd(601099) (- 1.46%), Haier Smart Home Co.Ltd(600690) (- 1.83%); The top three declines: Wanguo data – SW (- 21.04%), BiliBili – SW (- 17.52%), Ali health (- 15.21%). The stock, bond and foreign exchange markets have made a synchronous correction, and we still need to maintain confidence in adversity.
[A shares] last week, the media sector index fell 5.28%, the Shanghai Composite Index fell 3.87%, the Shenzhen Component Index fell 5.12%, and the gem index fell 6.66%. The top three gainers of the sector: Zhewen Pictures Group Co.Ltd(601599) (+ 9.01%), Perfect World Co.Ltd(002624) (+ 3.30%), Beijing Gehua Catv Network Co.Ltd(600037) (+ 2.39%); The top three declines in the sector: Inly Media Co.Ltd(603598) (- 16.99%), Fuchun Technology Co.Ltd(300299) (- 16.47%), Hangzhou Onechance Tech Corp(300792) (- 13.23%).
Company news:
[ G-Bits Network Technology(Xiamen)Co.Ltd(603444) ] the company released the 22q1 performance report. The 22q1 company achieved an operating revenue of 1.229 billion yuan, a year-on-year increase of 9.98%, and the net profit attributable to the parent company was 350 million yuan, a year-on-year decrease of 4.27%, lower than expected; The gross profit margin was 90.83%, with a year-on-year increase of 7.43pct, mainly because the company adjusted the operating cost and adjusted the promotion cost to the sales expense. The performance of the main games “ask for a hand tour” and “a read is free” is still stable, and “Obi Island: dream country” can be expected.
[ Wuxi Boton Technology Co.Ltd(300031) ] the company released the 2021 annual performance report and 22q1 performance report. In 2021, the operating revenue was 2.76 billion yuan, a year-on-year increase of 4.62%, and the net profit attributable to the parent was 403 million yuan, a year-on-year decrease of 7.81%; 22q1 achieved an operating income of 662 million yuan, a year-on-year decrease of 9.62%, and the net profit attributable to the parent company was 69 million yuan, a year-on-year decrease of 43.96%.
[ Iflytek Co.Ltd(002230) ] the company released the 2021 annual performance report and 22q1 performance report. The annual revenue continued to grow, Q1 maintained rapid growth, and education, open platforms and consumers were the main growth drivers.
Viewpoint:
[overseas] on April 21, the U.S. Securities and Exchange Commission (SEC) added 17 companies such as Zhihu, ideal automobile, Baishi group and shell to the “pre delisting list”, which is the fifth batch of Chinese stock companies to be included in the list since March. According to the SEC, 17 companies need to provide evidence to the sec before May 12 to prove that they do not have the conditions to be delisted. Meanwhile, the SEC transferred five Chinese stock companies, including Baidu, iqiyi, Nocera, Kaixin Yuanda pharmaceutical and futu holdings, from the “pre delisting list” to the “confirmed delisting list”. Previously, the five companies were included in the “pre delisting list” on March 30 local time. According to the requirements, they should provide evidence to the sec before April 20. However, the above developments are the normal promotion process of the “foreign company accountability law”, which has been expected before.
On April 21, Fang Xinghai, vice chairman of China Securities Regulatory Commission, revealed the latest progress of the negotiation at the Boao Forum for Asia. “The negotiation between the Chinese negotiation team led by China Securities Regulatory Commission and the United States is progressing very smoothly, and some details are implemented through video negotiation every other week.” Fang Xinghai said that he is confident that the two sides will reach a cooperation agreement in the near future, so that the American public company accounting supervision committee can reasonably, reasonably and legally carry out the inspection of Chinese accounting firms engaged in China concept audit in China. “The uncertainty will be removed soon, which will be good news for Zhongyu shares.”.
Last week, a shares, Hong Kong stocks and US stocks all experienced a sharp correction. The CSI 300 Index / Hang Seng Index / S & P 500 index fell 4.19% / 4.09% / 2.75% respectively this week.
International: the Federal Reserve once again signaled hawkish interest rate hikes. Powell said on Thursday, “in my opinion, it is appropriate to accelerate the pace of some interest rate hikes. I also think it is appropriate to make any adjustment in advance. I would say that a 50 basis point interest rate hike will be discussed at the May meeting.”, It shows the determination to resolutely reduce inflation. Affected by this, US stocks fell sharply on Thursday; The yield of us 10-year Treasury bonds soared to nearly 3%, a new high since December 2018; With the upside down of the interest rate difference between China and the United States, the exchange rate of US dollar / offshore RMB has also risen to more than 6.5. The comprehensive impact of the external stock, bond and foreign exchange markets has led to an obvious correction in China’s a / h market.
China: the prospect of epidemic prevention and control in Shanghai is still uncertain. Although the number of new cases has been corrected, it should take some time to clear and unseal. At the same time, the epidemic situation has spread to other parts of the country, and the epidemic prevention situation in Northeast China, Jiangxi, Beijing and other places is still severe. The continuous epidemic has an adverse impact on consumption, manufacturing, circulation and other links, and also makes the performance of Internet companies full of uncertainty in the second quarter. At the same time, the central bank’s RRR reduction on Friday (April 15) was less than expected, which weakened the market’s confidence in “stable growth”. The performance or guidance of some listed companies in the growth sector did not meet expectations, which also led to the further decline of growth style.
We believe that at present, there are still many factors unfavorable to the stock market in the world and China. As an offshore market, the China concept Internet sector is in a stage of great pressure in terms of fundamental performance and external environment, and is still grinding to the bottom. However, we believe that the unsealing of Shanghai and the solution of the “delisting of zhonggai shares” have been gradually expected, and the relevant favorable changes will boost the confidence of the market. From the valuation point of view, the quality Internet Co such as the US, Jingdong and Kwai has returned to a very attractive position. With the relief of the epidemic, the fundamentals of these companies will be improved significantly, and the long-term and long-term development prospects are still clear. We suggest investors to remain confident in adversity, continue to focus on the long-term fundamental development logic of these companies, and wait for the arrival of substantive benefits and performance inflection point.
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 launch in-depth research results for Kwai Fu, Jingdong and other enterprises, and continue to focus on the industry trends and the company’s development trend in the Internet.
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).
[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. Affected by the suspension of edition numbers in August 21 and the 830 new deal, the valuation of the game industry showed a downward trend in the past year, and the overall valuation was low. Gamma released the Q1 report on April 24. In 2022q1, the actual sales revenue of China’s game market was 79.474 billion yuan, an increase of 10.08% month on month and 3.17% year-on-year. In 2022q1, the actual sales revenue of China’s mobile game market was 60.432 billion yuan, an increase of 9.28% month on month and 2.72% year on year. The actual sales revenue of China’s independently developed games in overseas markets was US $4.554 billion, down 0.54% month on month.
Last week, we released a 50 page strategy report on the game industry: “broad world, promising”, which analyzed the impact of the game industry’s revenue in 2021, the 830 new deal and the suspension of the distribution of edition numbers on the industry, and discussed the core catalysts such as the normalization of edition numbers and the going to sea of games. The game industry has been in the post demographic dividend cycle, the supply side reform has become more intense, the growth rate of the industry has slowed down, and the game going to sea has become the main increment of the industry.
We analyzed the stock price cycle of game companies. The bottom of the growth rate of the industry where the version number was stopped in 18 years just corresponds to the bottom of the industry valuation. At the same time, the company valuation cycle is highly correlated with the product flow cycle. After the version number is normalized, Davis double click is expected to be realized. We believe that the reasonable valuation level of the game industry should be: (1) the game leaders [Tencent (22x in 22 years) and Netease (20x in 22 years)] can return to the steady-state valuation of more than 25X for a long time; (2) Take Tencent, Netease and the leading A-share companies Wuhu 37 Interactive Entertainment Network Technology Group Co.Ltd(002555) , G-Bits Network Technology(Xiamen)Co.Ltd(603444) historical valuations as the valuation anchor points, and give the valuation central target of A-share sector 22 years 20x, and the valuation central target of other targets of Hong Kong shares 22 years 10 ~ 15x; (3) Follow up attention will be paid to who can get the version number, who can push the game online as soon as possible, create new performance flexibility, and launch the head product.
We suggest that we focus our attention on what we suggest we focus our attention on: the normalnormalnormalnormalnormalnormality of a genre number, the big elasticity of the big elasticity + the benefits of a game going out to sea to get a game out to sea. The targets of [ Hongda Xingye Co.Ltd(002002) 55555 , Other A-shares and other A-Shares [ Hongda Xingye Co.Ltd(002002) Zhejiang Century Huatong Group Co.Ltd(002602) of celadongames, dream world, Netdragon, etc.
[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.
Last week, Xinda Textile clothing and overseas jointly released the 46 page Anta sports coverage report for the first time, “Anta Sports: the grand pass is like iron, and now it is stepping over from the beginning”, which resumed the basic situation and historical development of the company, and analyzed the current competition pattern and future trend of the sports track. We believe that Anta sports is expected to become the largest sports group in China.
[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’s financialization and securitization”, etc. the market has a certain impact on the investment sentiment of NFT related stocks, and we think there is no need to worry too much, It is proposed to clarify the value of NFT for the protection of intellectual property rights and still support culture. On March 25, the Ministry of industry and information technology was still collecting materials for the digital collection of industrial culture. 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. After passing the marketing, pico2 will increase its investment to 1.8 million units in 2022. Focus on the core target of metauniverse content: Wuhu 37 Interactive Entertainment Network Technology Group Co.Ltd(002555) (on April 20, the world’s first metauniverse game art museum built by Wuhu 37 Interactive Entertainment Network Technology Group Co.Ltd(002555) ) was officially launched), 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 broadcast live on the same stage on April 8, and Yu’s eldest son and his virtual person Zhou Xiaoyu brought goods live on the same stage on April 17), 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).
Risk factors
Risks such as delisting of zhonggai shares, Internet supervision and increased market volatility.
