\u3000\u3 China Vanke Co.Ltd(000002) 555 Wuhu 37 Interactive Entertainment Network Technology Group Co.Ltd(002555) )
Key investment points
Event: in 2022q1, the company achieved operating revenue of 4.089 billion yuan, yoy + 7.11%, qoq-0.40%, net profit attributable to parent company of 760 million yuan, yoy + 550.80%, qoq-34.17%, net profit not attributable to parent company of 762 million yuan deducted, yoy + 1977429%, qoq-31.21%, and the performance fell into the previous forecast range.
The revenue of going to sea maintained a high year-on-year growth rate, and continued to pay attention to the performance of main products and the progress of new tours. In 2022q1, the company’s overseas market revenue exceeded 1.4 billion yuan, with a year-on-year increase of more than 45%, accounting for more than 34%. According to data According to AI data, the company ranked No. 5 / 4 / 4 in the ranking list of Chinese game manufacturers’ overseas revenue from January to March 2022; In the ranking list of China’s mobile game revenue from January to March 2022 released by sensortower, the company’s main mobile game “Puzzles & survival” ranked 6 / 5 / 5 respectively, with excellent product long-term operation, and “song of Cloud City” ranked 23 / 16 / 14 respectively. The water continues to rise. Its IOS game best-selling list in South Korea ranked 24 / 19 / 13 respectively from January to March 2022, and the IOS game best-selling list in Japan ranked 69 / 44 respectively from February to March 2022. In terms of new tours, “Three Kingdoms: glory of heroes” has been launched in Hong Kong, Macao, Taiwan, Singapore and Malaysia, while ant theme SLG “ant Legion” and SLG “Chrono legacy” have been launched in the United States and other regions. They are still in the early tuning stage, and continue to pay attention to the follow-up performance. We believe that the company has accumulated rich experience in going to sea, and the strong issuance capacity and “adjusting measures to local conditions” strategy of going to sea are expected to continue to be verified. With the gradual release of profits by P & S and the contribution of revenue increment by the launch of cloud and Xinyou, the performance of going to sea will continue to increase and build the second growth pole of the company’s performance.
Profits increased year-on-year, and stock products were gradually recovered. In 2022q1, the net profit of parent company and non parent company increased year-on-year, which is mainly due to the different life cycles of operating products. Many new games such as Douluo mainland: Awakening of Wu soul and glory Archangel were launched in 2021q1, pushing up the sales expenses. The mismatch of income and expenses resulted in a low profit base. 2022q1 games entered the payback period and steadily contributed to the profit increment; The month on month decline is mainly due to the month on month increase in sales expenses caused by the promotion of “cloud” in 2022q1 and the launch of Xinyou. The gross profit margin of 2022q1 company is 86.29% (yoy-0.11pct, QoQ + 1.60pct), and the net profit margin of sales is 18.41% (YoY + 15.45pct, qoq-9.50pct). On the expense side, the sales expense ratio is 56.41% (yoy-16.94 PCT, QoQ + 11.29 PCT); The management fee rate was 2.64% (yoy-0.06 PCT, qoq-0.46 PCT); The R & D expense rate is 6.74% (yoy-1.77 PCT, QoQ + 0.44 PCT); In terms of cash flow, the net cash flow from operating activities of 2022q1 company is RMB 606 million.
Profit forecast and investment rating: we maintain the previous profit forecast. It is estimated that the EPS from 2022 to 2024 will be 1.51/1.82/2.16 yuan respectively, corresponding to the current share price PE of 16 / 13 / 11x respectively. We are optimistic that the company will continue to promote the “dual core + diversified” strategy, drive performance growth at home and abroad, and maintain the “buy” rating.
Risk tips: industry policies are tightened; The performance of new products is less than expected; The overseas market is not progressing as expected.
