On the evening of April 25, the listed companies of head game Wuhu 37 Interactive Entertainment Network Technology Group Co.Ltd(002555) and Perfect World Co.Ltd(002624) successively disclosed their annual reports of 2021. The performance growth rate was not bright, and Tencent’s game revenue increased by only 9% year-on-year in the second half of 2021. For the sluggish performance growth of head game companies, the Chinese game version number is regarded as an important disturbing factor. The review of domestic game version numbers was suspended after August last year, resulting in the postponement of the launch of some products.
With the recent restart of the edition number, the market has optimistic expectations for the performance growth of relevant listed companies Wuhu 37 Interactive Entertainment Network Technology Group Co.Ltd(002555) expects the net profit attributable to the parent company in the first quarter of this year to be 740 million yuan – 770 million yuan, with a year-on-year increase of 533.71% – 559.40%. According to the performance evaluation of the fourth phase of the employee stock ownership plan (Draft), the company’s goal is that the net profit in 2022 will not be less than 3.307 billion yuan and the growth rate will not be less than 15%. This performance target was considered to have greatly exceeded market expectations, boosted market confidence, and the company’s stock once hit the daily limit on April 26.
performance under pressure
Compared with the high growth rate in previous years, the performance of each game company in 2021 can be said to be “cloudy to overcast”.
On the evening of April 25, Wuhu 37 Interactive Entertainment Network Technology Group Co.Ltd(002555) released the annual report of 2021. During the reporting period, the company achieved an operating revenue of 16.216 billion yuan, a year-on-year increase of 12.62%; The net profit attributable to the parent company was 2.876 billion yuan, a year-on-year increase of 4.15% Perfect World Co.Ltd(002624) 2021 achieved an operating income of RMB 8.518 billion, a year-on-year decrease of 16.69%, and the net profit attributable to the parent company was RMB 369 million, a year-on-year decrease of 76.16%.
Tencent, the industry leader, is also under pressure. Affected by the postponement of the launch of two major products “DNF mobile game” and “dawn awakening” and the prevention of addiction of minors, Tencent’s game revenue has slowed down since the suspension of the game version, with a year-on-year increase of only 9% in the second half of 2021.
Comparatively speaking, Netease is less affected. Since September 2021, Netease has launched several trump products with version numbers. Driven by eternal robbery and Harry Potter: Magical awakening, the game revenue increased by 22% year-on-year in the second half of 2021.
version number dilemma resolution
Behind the weak performance of listed companies of head games, the domestic game version number has become an important disturbing factor.
Game version number is of great significance to the game industry. It is a prerequisite for the commercialization of game products. The domestic game version number was originally published on the website of the State Press and publication administration every month, but it was abnormal in August last year and was not disclosed until the end of the month. This situation was broken after eight months.
On April 11, the State Press and Publication Administration announced the first batch of 45 domestic game titles in 2022. Among them, there are 39 mobile games (2 leisure puzzle mobile games), 5 client games and 1 host game. Compared with that before suspension, the number of version numbers issued this time is significantly reduced. In December 2018, the version number was restarted and distributed in two batches, of which 79 were distributed in the first batch; In the first seven months of 2021, 108 edition numbers will be issued every month.
11 listed companies are involved behind the number of the approved version of this time, and 11 listed companies are behind the back of the 11 listed companies. A-share aspects include: dream big sailing for the dream of the big sea for ‘ Hongda Xingye Co.Ltd(002002) 3535 ‘Twilight mirror’, Jiangsu Phoenix Publishing & Media Corporation Limited(601928) ‘come to the bowl’; In terms of Hong Kong stocks, there are Jinshan software’s “origin of sword net 3”, heart company’s “party star”, Chuang mengtiandi’s “Beware of fire and candle”, etc.
“In the short term, it is actually good for the game company that has obtained the new number this time.” Cheng Ning (a pseudonym), chief media analyst of a securities firm in Shanghai, told the China Securities Journal that some listed companies have obtained version numbers, which will have a positive impact on their performance in 2022. For the head products of the head company, the R & D completion degree is relatively high. If the version number can be obtained later, the performance will bring substantial growth. At present, the main game products with good completion include “dawn awakening” held by Tencent and mobile game version of “eternal robbery” by Netease.
Similar to the restart of the game version number in December 2018, neither Tencent nor Netease obtained the version number in this wholesale release. In this regard, Li Jianhua (pseudonym), chief analyst of media of a securities firm in Beijing, believes that the two enterprises mainly focus on heavy game products, while this edition is mainly light games. The supervision is still relatively strict for the review of heavy games, and it is not difficult to understand that heavy games are less approved.
For the future direction of game approval, industry insiders judge that the audit scale will be stricter, and will be more inclined to games with content, high quality, excellent Chinese cultural themes and other characteristics.
industry prosperity restoration
The game industry ecology is being reshaped. “Since the release of the version number was stopped, with the further tightening of the regulation on the game, the fundamentals of the platform companies under the supervision of the Internet have declined, and the platform companies have abolished the game business.” Zheshang Securities Co.Ltd(601878) research report believes that there are no new entrants in the industry, which means that the supply side is really cleared.
Li Jianhua believes that a large number of issues in the industry have been further concentrated, which also makes the publishing of small companies in the industry more concentrated.
The profitability of relevant head enterprises is widely favored by the market. According to Qimai data, the growth rates of Tencent’s flagship Games “King glory” and “peace elite” in the first quarter of this year were 6.4% and – 6.92% respectively. Generally speaking, there was a slight improvement over the same period last year. On March 29, Tencent’s new game “return to the Empire” was launched. The Founder Securities Co.Ltd(601901) research report estimated that the game contributed 340 million yuan per month in the second quarter. DNF mobile game was launched in South Korea on March 24, ranking first in app store and top three in Google play bestseller list. Whether it will be launched in China will play an important role in the company’s performance.
For Chinese A-share companies, Wuhu 37 Interactive Entertainment Network Technology Group Co.Ltd(002555) expects the net profit attributable to the parent company in the first quarter of 2022 to be 740 million yuan – 770 million yuan, with a year-on-year increase of 533.71% – 559.40%. In terms of annual performance expectations, the fourth phase of the employee stock ownership plan (Draft) issued by the company gives some reference. The performance evaluation set in the stock ownership plan is divided into three stages, in which the corresponding net profit growth rates from 2022 to 2024 are not less than 15%, 25% and 35% respectively (the net profit is not less than 3.307 billion yuan, 3.595 billion yuan and 3.883 billion yuan). This performance target is considered to be much higher than market expectations.
Another head enterprise also sent a positive signal. In the first quarter of 2022, Perfect World Co.Ltd(002624) realized a net profit attributable to the parent company of 840 million yuan, an increase of 81% year-on-year. Among them, the game business realized a net profit of 864 million yuan, a year-on-year increase of 102%. At present, Perfect World Co.Ltd(002624) mobile game reserve products include “black cat anecdote society”, “Tianlong Babu 2”, “Kingdom of morning and night”, “one punch Superman: the world”, “million King Arthur”, “killing immortal 2”, “perfect Shanghai New World Co.Ltd(600628) ,” magic land 2 “, etc. the development of well-known IP games such as spirit cage and Fengshen series is also under active preparation. The easy vertical 3D mobile game Perfect World Co.Ltd(002624) : Battle of the gods was officially launched at the beginning of this year.
