\u3000\u3 China Vanke Co.Ltd(000002) 624 Perfect World Co.Ltd(002624) )
Key investment points
Event: the company released the annual report of 2021 and the first quarterly report of 2022. 22q1, the company achieved a revenue of 2.13 billion yuan, a year-on-year decrease of 4.6%; The net profit attributable to the parent company was 840 million yuan, a year-on-year increase of 81%; In 2021, the company achieved a revenue of 8.52 billion yuan, a year-on-year decrease of 16.7%; The net profit attributable to the parent company was 370 million yuan, a year-on-year decrease of 76.2%. The company’s profit distribution plan for 2021 plans to distribute cash dividends of 12 yuan (including tax) to all shareholders for every 10 shares
“Magic tower” performed brilliantly and helped the main industry achieve rapid growth. During the reporting period, the company launched a variety of games such as “old legend”, “God of war ruins”, “dream new killing immortal”, “magic tower” and so on. Among them, the mobile game “magic tower” has a brilliant performance and is deeply loved by players. The game integrates UE4 engine, high degree of freedom multi person open world playing method and waste soil light science fiction art style, realizing the dazzling performance of adding more than 10 million users in the first month and running water of nearly 500 million yuan in the first month. Version 2.0 of magic tower was launched on April 25, which may bring back active users. The performance of the new version is worthy of attention.
Increase R & D investment and reserve sufficient products. During the reporting period, the company increased R & D investment and encouraged the core R & D team to maintain innovation by adjusting salary policies. The annual R & D cost was about 2.21 billion yuan, a year-on-year increase of 39.1%. The number of games under development by the company has increased significantly compared with previous years. At present, mobile game products such as black cat anecdote society, the country of morning and night and one punch Superman: the world are actively promoting. In the future, with the commercialization of reserve projects, the performance can continue to grow.
Adjust the layout of overseas business and help the game go to sea in two dimensions. The company actively adjusts the layout of overseas business, sells American R & D studios and relevant local distribution teams in Europe and America, and will help the development of overseas business around the two dimensions of “Chinese products going to sea + overseas localization development”. 1) Domestic game going to sea: the mobile game “dream new killing immortal” was launched on the overseas market on March 17, 2022; “Magic tower” has been tested in many overseas places and is expected to be officially launched overseas within this year; 2) Overseas localization development: transfer to Canada with more talents and policy advantages, choose a more open younger team, and adjust measures to local conditions. The products are mainly stand-alone and mobile games that better meet the needs of overseas markets. The game going to sea is expected to promote the steady growth of the company’s performance.
Profit forecast and investment suggestions. It is estimated that the net profit attributable to the parent company from 2022 to 2024 will be 1.88 billion yuan, 2.17 billion yuan and 2.44 billion yuan respectively, and the corresponding PE will be 14 times, 12 times and 10 times respectively. Considering that the “magic tower” has entered the harvest period in 2022, the version iteration and overseas release, with sufficient superimposed follow-up projects, maintain the “buy” rating.
Risk tips: the risk of industry development falling short of expectations, the risk of macroeconomic fluctuations, and the risk of overseas issuance falling short of expectations.
