\u3000\u3 China Vanke Co.Ltd(000002) 555 Wuhu 37 Interactive Entertainment Network Technology Group Co.Ltd(002555) )
Event: Wuhu 37 Interactive Entertainment Network Technology Group Co.Ltd(002555) ( Wuhu 37 Interactive Entertainment Network Technology Group Co.Ltd(002555) . SZ) released the performance report for the first quarter of 2022 on April 29, 2022.
Comments:
In 2022q1, the revenue was 4.089 billion yuan, a year-on-year increase of 7.11%, the net profit attributable to the parent was 760 million yuan, a year-on-year increase of 550.80%, and the deduction of non attributable to the parent was 762 million yuan, a year-on-year increase of 1977429%.
The sales expense of 22q1 was 2.307 billion yuan, a year-on-year decrease of 17.62%, and the sales expense rate was 56.41%, a year-on-year decrease of 16.94pct. The management expense was 108 million yuan, with a year-on-year increase of 4.85%, and the management expense rate was 2.64%, with a year-on-year decrease of 0.06 PCT. The financial expense was -150541 million yuan, a year-on-year decrease of 35.74%, and the financial expense rate was -0.37%, a year-on-year decrease of 0.08pct. The R & D expense was 276 million yuan, a year-on-year decrease of 15.11%, and the R & D expense rate was 6.74%, a year-on-year decrease of 1.77 PCT.
Overseas income continued to increase, and attention was paid to the performance of reserve new tours. In 2021, the company released a number of games such as Douluo continent: duel of soul masters, Puzzles & survival, call me the big shopkeeper and song of Cloud City for the global market. During the reporting period, the company’s overseas market operating revenue exceeded 1.4 billion yuan, a year-on-year increase of more than 45%, and the revenue accounted for more than 34%. According to sensortower, with the overall growth of a variety of games in various overseas markets, the company entered the top 6 in the global revenue of Chinese mobile game publishers in January 22, and ranked the top 4 in February and March. At present, the company reserves 16 products overseas through self-research, agency and customization, including MMORPG, card, SLG, simulated operation and other different categories. Among them, “Three Kingdoms: the glory of heroes” has been launched in Hong Kong, Macao, Taiwan, Singapore and Malaysia, and SLG “Chrono legacy” has been launched in the United States and other regions. According to Qimai data, SLG “ant legend” has been continuously optimized since it was launched in the United States in February, and has recently reached the top 65 in the best seller list. Xinyou online contributes to the increment of revenue, and will continue to pay attention to the follow-up flow performance of Xinyou in the future.
The revenue of “Puzzles & survival” and “song of Cloud City” increased steadily and continued to break through overseas and local monopoly. According to sensortower, “Puzzles & survival” has steadily increased its revenue in Europe, America and Southeast Asia, ranking 6 / 5 / 5 in the overseas revenue of China’s mobile games in January / February / March, and fourth in the revenue list of puzzle solving RPG mobile games monopolized by local giants in Japan. It has become the work with the highest revenue of similar mobile games in other overseas markets such as the United States. With its deep localization, as well as the previous Spring Festival theme and spokesperson publicity activities, the song of yunshangcheng ranked No. 23 / 16 / 14 in the overseas revenue of Chinese mobile games in January / February / March, and was shortlisted as the top 5 in the best-selling list of Korean mobile games. It has become the highest paid Chinese mobile game in Korea, and its popularity in the Japanese market has gradually increased. After years of sea going experience and localized operation experience, the company has the ability to develop and operate “multi-point flowering” global popular games according to local conditions. With the gradual release of profits from major product games such as “Puzzles & survival”, “song of Cloud City”, the performance of overseas marine industry is expected to continue to increase.
The net profit attributable to the parent increased year-on-year, and a variety of games entered the growth period and steadily contributed to the profit increment. Compared with the difference in cost and revenue growth caused by the increase in the number of new online game products in 2021q1, many games such as “glory Archangel” and “Douluo continent: Wuhun awakening” launched in 2021q1 entered the payback period in 2022q1. At the same time, the vitality of stock products was continuously activated and businesses at home and abroad were promoted at the same time, which promoted the net profit of returning to the parent company in 2022q1 to 760 million yuan, an increase of 550.80% year-on-year. While the net profit attributable to the parent company decreased in 22q1, we believe that it is mainly due to the increase in sales expenses caused by the increased promotion of “Puzzles & survival” and “song of Cloud City” in 2022q1 and the launch of new overseas tour “ant Legion”. Under the company’s integrated research and operation strategy and refined operation, the online operation projects have performed well and the product life cycle has been continuously extended, laying a solid foundation for the steady development of the company’s business.
Investment suggestion: the company’s 22q1 performance exceeded expectations, the proportion of overseas revenue continued to increase, the transformation results were further verified, and the new tour and performance of the whole year were expected. The company has many years of rich experience in R & D and operation. Popular products such as Puzzles & survival, call me the big shopkeeper, the song of Cloud City, Douluo mainland: duel between soul masters and others have maintained the trend of “multi-point flowering” in domestic and foreign markets. In particular, the overseas game revenue continues to maintain high growth, which is expected to drive the further growth of performance. In terms of reserves, the company has reserved nearly 30 products at home and abroad through self-research, agency and customization, deepening the strategy of high-quality products, diversification and globalization. According to the latest appraisal target of the employee stock ownership plan released by the company on April 26, the growth rate of operating revenue in 22 / 23 / 24 years is not less than 15% / 25% / 35% (the operating revenue is not less than 186.48/202.7021892 billion yuan), or the growth rate of net profit is not less than 15% / 25% / 35% (the net profit is not less than 33.07/35.953883 billion yuan). It is suggested to focus on it.
Risk factors: the performance of core games is less than expected; the online progress of new games is less than expected; industry policy risk: the risk of core brain drain.
