\u3000\u3 Shengda Resources Co.Ltd(000603) 444 G-Bits Network Technology(Xiamen)Co.Ltd(603444) )
[key points of investment]
A variety of new products contributed to the steady growth of operating income, and the decline of investment income and the increase of minority shareholders' profits and losses dragged down the growth of profits. The operating income of the parent company was RMB 1.2 billion in the first quarter, with a year-on-year increase of 1.25% and a year-on-year decrease of 1.25%. The increase in operating revenue was mainly due to the increase in the contribution of products such as "Yinian Xiaoyao" (Mainland & Hong Kong, Macao and Taiwan Edition), "world catapult story", "underground castle 3: Soul poem" and "Moore Manor". The decrease in net profit was mainly due to 1) the increase of about 270 employees and the corresponding increase in salary; 2) The investment income of associated enterprises decreased by 54 million year-on-year; 3) The profit and loss of minority shareholders increased by 25 million year-on-year. In the first quarter of 2022, the company's gross profit margin was 90.6%, with a year-on-year increase of 7.4pct, mainly due to the decrease in the share paid by the developers of "ghost Valley eight wastelands (PC version)"; The sales expense rate was 25.7%, with a year-on-year increase of 2.1pct, mainly due to the increased investment in the marketing of new games, which improved significantly month on month; The rate of administrative expenses was 7.4%, with a year-on-year increase of 1.8pct; The R & D expense rate was 13.9%, with a year-on-year increase of 0.8pct, mainly due to the increase of R & D personnel. Looking at the R & D and distribution end separately, the R & D end achieved a net profit of 186 million in the first quarter, a year-on-year decrease of 3.7%; The issuer realized a net profit of 259 million (including minority shareholders' profits and losses), a year-on-year increase of 32.7%.
Self developed products are enduring, and the reserve of agent products is sufficient. "Ask" mobile game and "a thought of carefree" are the best works developed by the company. Among them, the "ask" mobile game opened its sixth anniversary in April, and the best-selling list ranked top 10 again; "Yinian Xiaoyao" has been online for more than one year and remains at the top 10 of the best seller list, which shows the long life cycle characteristics of the company's self-developed games. In addition, the company still has many proxy games such as Obi Island: a dream country, don't go after school, the story of hero base and the story of great navigation and exploration. With the gradual release of the version number, many games of the company are expected to go online and further contribute to the growth of performance. In terms of R & D strategy, the company adopts rapid iteration, focuses on MMO, SLG and hanging up categories, and increases overseas investment (new R & D projects must be based on positioning overseas markets). In terms of distribution strategy, the company adheres to the high-quality line, creates products with both differentiation and commercialization, adheres to long-term operation, and realizes win-win reputation and commercialization
[investment suggestions]
We believe that the company is a scarce company in the industry, which takes into account the high-quality R & D and long-term operation ability. Its "ask" end mobile game maintains an ultra long life cycle; The success of Yinian Xiaoyao has also expanded the company's multi category strategy and consolidated the self-study matrix. The overseas market is expected to bring new increment to the company. We expect that the company's operating revenue from 2022 to 2024 will be 5.46/62.2/7.1 billion, the net profit attributable to the parent company will be 1.70/19.4/22.2 billion, the EPS will be 23.7/27.0/30.9 yuan, and the PE will be 14 / 13 / 11 times respectively, maintaining the "overweight" rating.
[risk tips]
Macroeconomic downside risk;
Policy supervision risk.
