\u3000\u3 China Vanke Co.Ltd(000002) 624 Perfect World Co.Ltd(002624) )
Event: in 2021, the company realized a revenue of 8.518 billion yuan, yoy-16.69%, and a net profit attributable to the parent company of 369 million yuan, yoy-76.16%, deducting a net profit not attributable to the parent company of 102 million yuan, yoy-90.26%. At the same time, it plans to distribute a cash dividend of 12 yuan to all shareholders for every 10 shares. In 2022q1, the revenue is RMB 2.128 billion, yoy-4.60%, QoQ + 19.67%, and the net profit attributable to the parent company is RMB 840 million, yoy + 80.99%, deducting the net profit not attributable to the parent company of RMB 414 million, yoy + 30.15%. The results fell into the previous forecast range.
In 2021, during the game business transformation period, the performance was under pressure, and the R & D investment increased significantly. In 2021, the company’s game business was in the stage of strategic upgrading and product iteration, with a revenue of 7.421 billion yuan, yoy-19.88%, a net profit attributable to the parent company of 720 million yuan and yoy-68.48%, and a net loss attributable to the parent company of 200 million yuan in film and television business, mainly due to the loss of single investment. In 2021, the gross profit margin of the company was 61.46% (YoY + 1.14pct) and the net sales profit margin was 2.08% (yoy-12.63pct), which was mainly due to the increase of R & D investment and the decline of operating profit of the invested enterprise; The R & D expense rate was 25.96% (YoY + 10.42pct), of which the R & D expense rate increased to 47.97% (YoY + 29.16pct, QoQ + 27.59pct) due to salary adjustment in 2021q4.
Cost reduction and efficiency enhancement focus on the track, and “magic tower” drives the performance growth of 2022q1. In 2022q1, the net profit attributable to the parent company increased year-on-year, mainly due to the main increment contributed by “magic tower” and “dream new kill immortal”. At the same time, the profit and loss from the disposal of non current assets was 432 million yuan, mainly for the sale of American R & D studios and relevant local distribution teams in Europe and America. In 2022q1, the company’s net sales interest rate was 39.04% (YoY + 18.75pct, QoQ + 70.69pct), and the R & D expense rate and sales expense rate improved significantly month on month, with the sales expense rate of 13.05% (yoy-0.70pct, qoq-18.08pct); The R & D expense rate was 26.51% (YoY + 7.90pct, qoq-21.46pct). The year-on-year increase was mainly due to the increase of R & D investment in key projects and the continuous streamlining of the team, resulting in phased personnel optimization costs, which improved significantly month on month. We believe that it is mainly due to the adjustment of salary policy in 2021q4, which has been reflected in Q4 single quarter. In 2021, the company gradually streamlined its projects, with an investment income of 408 million yuan, mainly due to the disposal of the equity of some subsidiaries and associated enterprises. At the same time, the layout of overseas Games has been clear, and the subsequent overseas issuance is expected to transition from authorized third parties to independent issuance. We believe that the company will continue to reduce costs and increase efficiency in 2022. We are optimistic about the performance recovery after the focus of the game business. At the same time, we expect that the follow-up new projects and startup projects of the film and television business will be more cautious and the financial performance will stabilize.
“Magic tower” is worth looking forward to going to sea, the product reserve is globalized, and the Chinese product pipeline is waiting for the release of the version number. Version 2.0 of magic tower was launched on April 25, 2022. On that day, the ranking of its IOS game best seller jumped from 78th to 11th. We are optimistic about the long-term operation of the product. The company expects that “magic tower” will be launched in overseas regions in 2022, and the copyright and flow share are expected to thicken the company’s performance. In terms of product reserve, the edition numbers of “Tianlong Babu 2”, “the country of morning and night” and “black cat anecdote society” are still under application, and are expected to go online in overseas markets within 2022; The imported products “one punch Superman: the world”, “one million King Arthur” and “P5” are also waiting for the imported game version numbers. The company will release them in priority to overseas regions according to the project progress. The company expects that the end game “Zhuxian world” will start a large-scale test in 2022q3, and the product is expected to go online by the end of 2022 or 2023.
Profit forecast and investment rating: considering the impact of the suspension of China’s game edition, we lowered our previous profit forecast. It is estimated that EPS in 20222024 will be 0.98/1.11/1.28 yuan respectively (1.46/1.68 yuan before 20222023), corresponding to the current share price PE of 13 / 12 / 10x respectively. Optimistic about the company’s high-quality, diversified and young strategic practice, and maintain the “buy” rating.
Risk warning: risk of product launch delay; Risk of stricter industry supervision; Systemic risk.
