\u3000\u3 China Vanke Co.Ltd(000002) 555 Wuhu 37 Interactive Entertainment Network Technology Group Co.Ltd(002555) )
Event: the company announced the financial report of 2021 and the first quarter of 2022: the revenue in 2021 was 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%. In 2022, Q1 achieved a revenue of 4.089 billion yuan, a year-on-year increase of 7.11%; The net profit attributable to the parent company was 760 million yuan, a year-on-year increase of 550.80%.
The main products performed well and entered the profit release period: the mobile game revenue in 2021 was 15.364 billion yuan, with a year-on-year increase of 15.55%. During the period, the products such as glory archangel and Douluo mainland: duel of soul masters performed well, with a maximum monthly flow of more than 1.7 billion yuan. The net profit attributable to the parent company of 2022q1 increased by 550.80% year-on-year, which is due to the low base of the publicity and distribution expenses of new games launched in 2021q1. The main products launched in 2021 will gradually enter the recovery stage. It is expected that the profits will be released stably, and the refined operation will prolong the product life cycle and accumulate higher water.
Diversified product matrix, customized distribution strategy, and overseas business has become a new engine for revenue growth: the company has basically formed a diversified overseas product matrix. Combined with customized marketing promotion and long-term operation, the profits of “Puzzles & survivals” have remained stable, the flow of “song of Cloud City” has continued to grow, and the performance of “soul master duel” and “call me big shopkeeper” has been excellent. In 2021, the overseas revenue was 4.777 billion yuan, yoy 12.2 billion yuan 94%, accounting for 29.46% of the revenue. The company ranks among the top ten in the revenue of offshore game manufacturers; In 2022q1, the overseas business accelerated again, with a revenue of more than 1.4 billion yuan, yoy more than 45%, accounting for more than 34.24% of the revenue.
There are abundant game reserves at home and abroad, and employee stock ownership shows confidence in performance growth: in 2022, the company reserved nearly 30 products around MMORPG, SLG, simulation operation and cards, many of which have been issued with edition numbers, and dream navigation has been issued with the first batch of game edition numbers in 2022; Overseas, the Three Kingdoms: the glory of heroes, Chrono legacy, ant Legion and other games have entered the testing stage. The fourth phase of the company’s employee stock ownership plan announced that the revenue or net profit growth of the performance target from 2022 to 2024 (2021 is the base period) is not less than 15% / 25% / 35%, demonstrating the confidence of the company’s performance growth.
Investment suggestion and rating: we expect that the company will realize the net profit attributable to the parent company of 3.27 billion, 3.556 billion and 3.975 billion from 2022 to 2024. The current share price corresponding to PE is 14 times, 13 times and 12 times respectively. Based on the stable income of the company in China, the rapid growth of overseas income and rich game reserves, we give a “buy” rating.
Risk warning: stricter regulatory policies; The launch of the new game is not as expected; Risks such as untimely acquisition of version number
