\u3000\u3 China Vanke Co.Ltd(000002) 555 Wuhu 37 Interactive Entertainment Network Technology Group Co.Ltd(002555) )
Event: Wuhu 37 Interactive Entertainment Network Technology Group Co.Ltd(002555) ( Wuhu 37 Interactive Entertainment Network Technology Group Co.Ltd(002555) . SZ) released the annual performance report of 2021 on April 25, 2022.
Comments:
Wuhu 37 Interactive Entertainment Network Technology Group Co.Ltd(002555) in 2021, the revenue reached 16.216 billion yuan, an increase of 12.62% year-on-year. The net profit attributable to the parent was 2.876 billion yuan, a year-on-year increase of 4.15%, and the deduction of non attributable to the parent was 2.627 billion yuan, a year-on-year increase of 9.82%. During the reporting period, the company’s newly launched “Douluo mainland: duel between soul masters”, “glory Archangel”, “Douluo mainland: Awakening of martial spirits”, and the global release of “Puzzles & survival”, “call me the big shopkeeper”, “song of Cloud City” and other games performed well, continuously promoting the high-quality products, diversification and market globalization.
Quarterly, 2021q4 achieved a revenue of 4.106 billion yuan, a year-on-year increase of 32.01%, a net profit attributable to the parent of 1.154 billion yuan, a year-on-year increase of 130.54%, and a deduction of 1.108 billion yuan, a year-on-year increase of 151.26%, exceeding the previous market expectation.
The company expects that the net profit attributable to the parent company in 2022q1 will be 740770 million yuan, with a year-on-year increase of 533.71% to 559.40%. The performance is stable and highlights the long-term value.
Overseas income continued to grow, and the strategic layout of globalization accelerated significantly. In 2021, the operating revenue of overseas business was 4.777 billion yuan, with a year-on-year increase of 122.94%, accounting for 29.46% of the operating revenue, and the proportion of revenue doubled to 29.46%. By December 2021, “Puzzles & survival” had accumulated more than 2.5 billion yuan, and successfully ranked fourth in the global mobile game revenue growth list in 2021 according to sensor tower. The MMORPG mobile game “song of cloud going to the city”, the ancient simulated business mobile game “call me the big shopkeeper” and the self-developed card mobile game “Douluo continent: duel between soul masters” also continue to sell well in Southeast Asia and other regions. The company’s overseas revenue of various products has increased across the board, ranking among the top in the list of overseas revenue of Chinese game manufacturers for many consecutive months. The overseas business has become the second driving force for the steady development of the company.
The company continues to increase the investment in product research and method, and self-developed Douluo mainland: soul master duel to verify the high-quality strategy. In 2021, the company invested 1.25 billion yuan in R & D, a year-on-year increase of 12.37%, the R & D expense rate was 7.71%, and there were 1958 R & D personnel, accounting for 48.97% of the total number of employees. The per capita R & D investment has reached 638000, with a year-on-year increase of 34%. The company’s heavy self-developed battle strategy card mobile game “Douluo mainland: duel between soul masters” has performed well since its launch in July 21, ranking the top 4 in the best-selling list of IOS games, ranking 11th on average. It has laid a solid foundation for the company’s high-quality R & D process and formed a unified and effective system in the next generation of game R & D. With the support of cutting-edge technologies such as next-generation 3D engine, AI and big data analysis platform, the company has formed a professional layout in multiple market segments such as MMORPG, card, SLG and simulated operation. At present, R & D investment projects include code magic m, code C6, code ancient style, code 3D WTB, code Three Kingdoms by, code AOE and code cy.
Xinyou has rich reserve categories, with nearly 30 models at home and abroad. In 2022, adhering to the strategy of high-quality products, diversification and market globalization, the company reserved nearly 30 products at home and abroad through self-research, agency and customization, including different categories such as MMORPG, card, SLG and simulated operation, covering topics such as multi civilization, magic, immortal Xia, city and women. The diversified product matrix has begun to take shape and the product structure has been continuously optimized. Among them, the edition number of “dream Voyage” was approved in April, and the edition numbers of “dawn plan”, “fortress of the air: sailing” and “the last primitive man” have been issued. Xinyou online will lay a solid foundation for performance growth in 22-24 years.
AI distribution raises competition barriers, and systematic digital marketing helps secondary growth. The company forms a real-time monitoring system through the self-developed AI intelligent delivery system “quantum” and the operation analysis system “Tianji”, so as to improve the precision delivery ability and delivery efficiency. At the same time, the company adheres to the distribution idea of “integration of quality and efficiency”, grasps the market changes and carries out high-quality publicity. On the other hand, through systematic digital marketing, accurately grasp the needs of users, deeply cultivate the online operation projects through fine operation, provide detailed long-term services, prolong the product life cycle, and realize the secondary growth of multiple projects during the reporting period.
Issue the fourth employee stock ownership plan to encourage common development and highlight team confidence. The company issued the fourth phase of employee stock ownership plan (Draft). The incentive objects are core management and key personnel (no more than 650 people), holding a total of 163015 million shares, accounting for 0.74% of the total share capital of the company. The price of the shares repurchased by the transferee company is 0 yuan / share, the total amount paid by the company for repurchase is about 300 million, and the duration of the stock ownership plan is 72 months. The performance assessment is divided into three stages, that is, the growth rate of operating revenue in 22 / 23 / 24 is not less than 15% / 25% / 35% (the operating revenue is not less than 186.48/202.7021892 billion yuan), or the growth rate of net profit is not less than 15% / 25% / 35% (the net profit is not less than 33.07/35.953883 billion yuan), and the unlocking proportion at the corresponding company level is 30%, 30% and 40% respectively.
Investment suggestion: the company’s annual performance in 21q4 and 21 exceeded expectations, the performance of new travel and performance in 22 was expected, and employee motivation showed confidence. The company has many years of rich experience in R & D and operation. Popular products such as “Puzzles & survival”, “call me the big shopkeeper”, “song of Cloud City”, “Douluo mainland: duel between soul masters” have maintained a “multi-point flowering” trend in domestic and foreign markets, especially the continuous high growth of overseas game revenue, which is expected to drive the further growth of performance. In terms of reserves, the company has reserved nearly 30 products at home and abroad through self-research, agency and customization, including different categories such as MMORPG, card, SLG and simulated operation. The strategy of high-quality products, diversification and globalization is deepened. According to the assessment objectives of the company’s latest employee stock ownership plan, the growth rate of operating revenue in 22 / 23 / 24 is not less than 15% / 25% / 35% (the operating revenue is not less than 186.48/202.7021892 billion yuan), Or the net profit growth rate shall not be less than 15% / 25% / 35% (the net profit shall not be less than 33.07/35.95/3.883 billion yuan). It is recommended to focus on it.
Risk factors: the performance of core games is less than expected; the online progress of new games is less than expected; industry policy risk: the risk of core brain drain.
