\u3000\u3 China Vanke Co.Ltd(000002) 555 Wuhu 37 Interactive Entertainment Network Technology Group Co.Ltd(002555) )
Event:
1. The company announced its 2021 annual report, realizing an operating revenue of 16.22 billion yuan, yoy + 12.6%; The net profit attributable to the parent company is 2.88 billion yuan, yoy + 4.2%; Deduct non net profit of 2.63 billion yuan, yoy + 9.8%. The current dividend is 3.7 yuan (including tax) for every 10 shares, and the actual dividend for every 10 shares in 2021 is 5.2 yuan. Calculated according to the current stock price, the dividend rate is 2.6%.
2. The company announced the advance notice of the first quarterly report of 2022, which is expected to realize the net profit attributable to the parent company of 740 ~ 770 million yuan, yoy + 533.7% ~ 559.4%; Deduct non net profit of 740 ~ 770 million yuan, yoy + 192022% ~ 199847%.
3. The company announced the draft of the fourth phase of the employee stock ownership plan. The proposed incentive objects are no more than 650 core personnel. The stock source is 16.3 million shares repurchased by the company with 300 million yuan in August 2021 and transferred at zero price. 4. The company announced the achievement of Guangzhou Panax notoginseng’s performance commitment. In 2021, Guangzhou Panax notoginseng achieved a net profit attributable to the parent company of 1.63 billion yuan, deducting 1.62 billion yuan of non net profit, exceeding the performance commitment of 1.44 billion yuan.
Key investment points:
In 2021, seagoing adhered to the issuance mode of “large market, multiple categories and adjusting measures to local conditions”. The year-on-year growth rate of overseas revenue was 123%, driving the growth of overall revenue. The performance of key products such as Puzzles & Survival continued to be stable. The company’s annual revenue in 2021 was 16.22 billion yuan (YoY + 12.6%), mobile game revenue was 15.36 billion yuan (YoY + 15.6%), web game revenue was 830 million yuan (yoy-23.2%), 2021q1 / Q2 / Q3 / Q4 revenue was 38.2/37.2/45.7/4.13 billion yuan respectively, yoy-12.1% / + 2.1 / + 38.5% / + 32%, and 2021q4 revenue qoq-10.2%. We believe that the decline in Q4 revenue is mainly due to the launch of 2021q3’s heavy product Douluo mainland: duel of soul masters, and 2021q4’s no key new products. By region, the company achieved domestic revenue of 11.44 billion yuan (yoy-6.7%) in 2021, including mobile games of 10.6 billion yuan (accounting for 69% of the total revenue of mobile games); Overseas revenue is 4.78 billion yuan (YoY + 122.94%), of which mobile games are 4.76 billion yuan (accounting for 31% of the total revenue of mobile games). In 2021, the maximum monthly flow of mobile games issued overseas by the company exceeded 700 million yuan (500 million yuan in the first half of 2021), which was jointly driven by the growth of multiple products such as Puzzles & survival, call me the big shopkeeper, song of Cloud City, Douluo mainland: duel between soul Masters and so on. As of December 2021, “Puzzles & survival” has accumulated more than 2.5 billion yuan. On April 23 and April 24, it ranked No. 8 in the US IOS best seller list and No. 5 in Japan IOS best seller list, reaching a record high. In the operating cost in 2021, the game was divided into 2.22 billion yuan (YoY + 42.6%), resulting in a decline in the gross profit margin to 84.5% (- 3.3pct). In 2021, the annual sales expense was 9.13 billion yuan, and the sales expense rate remained stable at 56.3%, mainly from the Internet traffic expense of 8.77 billion yuan (YoY + 9.4%); The R & D expense is 1.25 billion yuan (YoY + 12.4%), and the R & D expense rate is 7.7%. The number of R & D personnel of the company exceeds 1900, accounting for 49% of the total number of employees, a decrease of 386 over the previous year. The net profit and loss of non-governmental investment in 2020 is 78.1 billion yuan, which is the same as that of non-governmental investment in 2020, and the net profit and loss of non-governmental investment is 7.81 billion yuan, deducting 3.02% of the basic profit and loss of the company. The net profit attributable to the parent company in 2021q1 / Q2 / Q3 / Q4 is RMB 1.2/7.4/8.7/1.15 billion respectively, yoy-84% / – 24.1% / 54.8% / 130.5%. The company expects to realize a net profit of 740 ~ 770 million yuan from the parent company and deduction of non net profit in 2022q1, which is basically in line with the expectation. The year-on-year high growth is mainly due to the short-term fluctuation of performance caused by the increased launch of 2021q1 products such as Puzzles & survival and glory archangel, with a low base.
Reserve nearly 30 products, 5 of which have won the Chinese version number. The self-developed project involves multiple tracks such as MMO, card, SLG and simulation. The company has reserved nearly 30 products, and some key self-developed products include MMO code 3D WTB, code magic m, code ancient style, code Xiuxian biography, card code C6, code quadratic ZQ, code Sanxiao card, SLG Three Kingdoms: the glory of heroes, code AOE, simulated operation code cy, etc. “Dawn plan”, “fortress of the sky: sailing”, “the last primitive man”, “light handed down” and “dream Voyage” have won the Chinese version, and overseas “code C6”, “Three Kingdoms: the glory of heroes” and “ant Legion” are in the initial stage of debugging or launching.
It is proposed to launch the fourth phase of the employee stock ownership plan to motivate 650 key personnel, accounting for about 16% of the total number of employees. The assessment goal in 2022 is to increase revenue / net profit by 15% year-on-year. The proposed incentive objects of the shareholding plan include a total of 7 directors and supervisors, including director and deputy general manager Yang Jun, director and deputy general manager Liu Jun, chairman of the board of supervisors He Yang, supervisor Cheng Lin, supervisor Liu Fengyong, deputy general manager Zhu Huaimin, Director Secretary and CFO Ye Wei, and no more than 643 core backbone employees. The incentive plan totals 163015 million shares, accounting for 0.74% of the total share capital of the company. The shares are obtained by transferring the shares repurchased by the company at zero price, and employees do not need to contribute; Assessment indicators for phase I / II / III: the growth rate of revenue or net profit in 2022 / 2023 / 2024 shall not be less than 15% / 25% / 35% (YoY + 15% / 9% / 8%) relative to 2021, and the corresponding revenue shall not be less than 186.5/202.7/218.9 billion yuan or the net profit shall not be less than 33.1/36/3.88 billion yuan.
Profit forecast and investment rating: under the diversification strategy, the company’s revenue structure is continuously optimized, the performance stability is improved, and the reserves of marine products are abundant, which is expected to be further improved; The employee stock ownership plan binds the core backbone to stimulate vitality; China’s game sector policy has entered a stable period. It is estimated that the net profit attributable to the parent company from 2022 to 2024 will be RMB 3.31/38.2/4.33 billion, the corresponding EPS will be RMB 1.5/1.7/2.0, and the corresponding PE will be 13 / 11 / 10x, maintaining the “buy” rating.
Risk tips: public opinion risk, policy risk, increased competition risk, exchange rate risk, risk that the progress and performance of new products are less than expected, risk that the flow cost increases, risk that the life cycle of old products is less than expected, risk that the version number is obtained, risk of core brain drain, risk of player preference change, risk that the technology development is less than expected, risk of corporate governance / asset impairment / lifting the ban and reducing holdings, downside risk of the industry valuation center Overseas market related risks, etc.
