\u3000\u3 China Vanke Co.Ltd(000002) 555 Wuhu 37 Interactive Entertainment Network Technology Group Co.Ltd(002555) )
Event: the company issued the annual report of 2021 and the performance forecast of the first quarter of 2022. In 2021, the company achieved a 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%, exceeding the previous forecast guidance of 2.8 billion yuan to 2.85 billion yuan. In addition, the net profit attributable to the parent company is expected to be 740 million yuan to 770 million yuan in 2022q1, with a year-on-year increase of 533.71% – 559.40%
The performance continued to exceed expectations, and the new round of employee stock ownership plan showed confidence in long-term development. The performance of the company in 2021 was low before and high after. The net profit attributable to the parent company in 2021q3 and Q4 was 867 million yuan and 1.154 billion yuan respectively, with a year-on-year growth rate of 54.77% and 130.54% respectively. The successful establishment of diversified product matrix has driven the company to reduce the sales expense rate by 0.76 PCT to 56.27% in 2021, which is expected to remain stable in the future; In the second half of last year, the company’s performance broke through the inflection point and rose. It is expected that the net profit attributable to the parent company in 2022q1 will exceed the level of household dividend period in 2020q1, and the performance volatility will be reduced. In addition, the company launched a new phase of employee stock ownership plan for no more than 650 employees, and the target net profits in 2022, 2023 and 2024 are no less than 3.307 billion yuan, 3.595 billion yuan and 3.883 billion yuan respectively.
“Self research + going to sea” has achieved remarkable results, and the flow of core products is stable. 1) In terms of self research, the team takes Guangzhou as the core, and sets up R & D subsidiaries or R & D branches in Suzhou, Xiamen, Wuhan, Chengdu and other places to attract a variety of talents; The team size exceeded 1957, accounting for 48.97%. The self-developed card “Douluo mainland: duel between soul masters” has opened up the logic and efficiency of subsequent generation R & D, with a flow of more than 700 million in the first month. At present, it still maintains the income of 20-25 popular IOS games. 2) In terms of going to sea, the phenomenon product “P & S” has a cumulative flow of more than 2.5 billion, and the MMORPG mobile game “song of cloud going to the city” ranked top 5 in the best-selling list after it was launched in South Korea. Since 2022, the company has ranked among the top 5 mobile game publishers in sensortower China, significantly higher than the top 5-10 last year. In 2021, the company’s overseas monthly flow peak exceeded 700 million yuan; The annual overseas revenue was 4.777 billion yuan, a year-on-year increase of 122.94%, and the proportion in revenue increased by 14.58pct to 29.46% year-on-year; The company expects that the overseas revenue will exceed 7 billion yuan in 2022, with a year-on-year growth rate of more than 45%, and the long-term target overseas revenue will account for 50%.
Abundant product reserves provide strong support for the release of medium and long-term performance. The company reserves nearly 30 products at home and abroad through self-research, agency and customization, including about 20 for China (7 for self-research) and about 16 for overseas (8 for self-research). Dream voyage, the last primitive man, fortress of the air: sailing, dawn plan, etc. issued for China have all obtained their version numbers. Code C6 (self-propelled chess card) and ant Legion (SLG) issued for overseas have been tested abroad and are expected to be launched this year to contribute to the increase of performance.
Investment suggestion on profit forecast: the company’s “self research + going to sea” “The transformation has gradually made breakthroughs, and overseas business will continue to make efforts in the future to help gradually release future performance. It is estimated that the company’s revenue in 2022 / 2023 / 2024 will be 19.206 billion yuan / 22.281 billion yuan / 25.691 billion yuan, the net profit attributable to the parent company will be 3.33 billion yuan / 3.808 billion yuan / 4.322 billion yuan, EPS will be 1.50 yuan / 1.72 yuan / 1.95 yuan, and the corresponding PE will be 13.99 times / 12.23 times / 10.78 times. Taking 2022 as the benchmark, the company will be given 18-20 times PE, corresponding to a reasonable price range of 27.00 yuan-30.00 yuan “Buy” rating company.
Risk tips: changes in policy and supervision; Intensified market competition; The running water is less than expected; Product launch delay.
