\u3000\u3 China Vanke Co.Ltd(000002) 624 Perfect World Co.Ltd(002624) )
Strategic transformation put pressure on short-term performance, and magic tower led to the repair of Q1 performance and maintained the “buy” rating
The company released the annual report of 2021 and the first quarterly report of 2022. In 2021, the company realized an operating revenue of RMB 8.518 billion (year-on-year – 16.69%), and a net profit attributable to the parent company of RMB 369 million (year-on-year – 76.16%). The decline in revenue and net profit attributable to the parent company was mainly due to the connection between new and old games, the increase in R & D investment, and the decline in operating profit of invested enterprises. In 2022q1, the company achieved an operating revenue of 2.128 billion yuan (year-on-year – 4.60%), deducting a net profit of 414 million yuan (year-on-year + 30.15%). The decline in revenue was mainly due to the sale of overseas R & D and localized distribution teams, and the increase in net profit deducting non parent was mainly due to the large profit increment contributed by the performance release of magic tower. Based on the company’s performance, we lowered the profit forecast for 20222023 and added a new profit forecast for 2024. It is predicted that the company’s operating revenue for 2022, 2023 and 2024 will be RMB 11.232129.19/143.51 (the value before 20222023 is RMB 12.536147.22) billion respectively, the net profit attributable to the parent company will be RMB 18.10/20.63/23.63 (the value before 20222023 is RMB 2.008/29.31) billion respectively, the corresponding EPS will be RMB 0.93/1.06/1.22 respectively, and the current share price will be 14.1/12.4/10.8 times PE respectively, We are optimistic about the company’s game business strategic transformation and upgrading and R & D innovation breakthrough ability, and maintain the “buy” rating.
The adjustment of game business has been deepened, and the rate of R & D expenses has increased
In 2021, the company’s R & D expenditure was 2.211 billion yuan (year-on-year + 39.13%), and the R & D expenditure rate was 25.96% (year-on-year + 10.42pct). The company actively expands game innovation categories, and the high investment in R & D is expected to be realized as the company’s performance. At the same time, the company timely adjusted its overseas layout. In the future, it will focus on the two dimensions of “Chinese products going to sea + overseas localization development”. The game going to sea will gradually change from third-party distribution to independent distribution, which will help the company give full play to its R & D advantages, supplement the global distribution capacity and improve the profitability of overseas business.
“Magic tower” and “dream new kill immortal” are expected to become the basic performance sector, and we look forward to the subsequent sea to bring performance increment
According to the annual report, “dream new kill immortal” achieved a cumulative flow of 1.6 billion yuan in 2021 and was launched in many overseas places in March 2022. “Magic tower” added more than ten million users in the first month, with a running water of nearly 500 million yuan in the first month. It has been tested overseas in April 2022 and is expected to be launched in 2022. “Magic tower” and “dream new kill immortal” preliminarily verify the company’s R & D and innovation ability, which helps to consolidate the basic performance of the company, and later go online overseas or further contribute to the performance increment.
Risk tip: the flow of classic games is declining, the performance of new games is less than expected, and the policy of the game industry has changed.
