\u3000\u30 Beijing Telesound Electronics Co.Ltd(003004) 18 Kunlun Tech Co.Ltd(300418) )
Key investment points
Event: in 2021, the company realized an operating revenue of 4.85 billion yuan, yoy + 4.75% (Note: in 2021, the company completed the consolidation of opera and stargroup, forming a business merger under the same control. The year-on-year change data here is calculated based on retroactive adjustment, the same below). The net profit attributable to the parent company was 1.547 billion yuan, yoy-69.32%, deducting the net interest rate not attributable to the parent company of 1.285 billion yuan, yoy-37.87%. In 2022q1, the company realized operating revenue of 1.193 billion yuan, yoy + 9.06%, net profit attributable to the parent company of 374 million yuan, yoy + 17.20%, deducting net profit not attributable to the parent company of 411 million yuan, yoy + 36.41%.
The overseas market continued to expand, the provision for impairment of investment business put pressure on profits, and the game business grew steadily. In 2021, the company’s overseas market revenue accounted for 71%, and the company expects this proportion to increase to about 80% in 2022. In 2021, the company’s gross profit margin was 71.72% (yoy-4.20pct); The net profit margin on sales was 30.53% (yoy-73.60pct), a year-on-year decline, mainly due to 1) the one-time income from the sale of Grindr in 2020, resulting in a high base; 2) The capital market continued to decline in 2021q4, and the company accrued sufficient investment losses, putting pressure on the profit side. In the game business segment, in 2021, the company’s self-developed new tour “Holy Land tower” was launched in Southeast Asia with outstanding performance. The product has been launched in Hong Kong, Macao and Taiwan in 2022q1, and is planned to be launched in Chinese Mainland, Europe and the United States within this year, contributing to the performance increment. At the same time, the company has stored self-developed projects such as “Legend of the dragon” and “temptation under the moon”.
Opera: the growth of users continued, and the business sector of yuanuniverse performed well. Opera had an average monthly active users of nearly 360 million in 2021, and users in Latin America and North America increased by 35% / 22% year-on-year respectively. Benefiting from the continuous penetration of regions with high ARPU value, the annualized ARPU in 2021q4 reached US $0.83, yoy + 63%. By the end of 2021, the monthly active users of the game browser Opera GX had exceeded 14 million, yoy + 100%. The meta universe project was built in collaboration with the developer oriented game engine opera GMS and the game community platform opera GXC. By the end of 2021, the monthly active users of opera meta universe project were about 1 million. After adjusting its core business to $20.21 billion, the company is expected to realize a steady increase in revenue of $20.21 billion to $60.2 million after the release of $20.21 billion in operating revenue.
Starx: consolidate the core market and expand areas with high ARPU value. In 2021, the company completed the consolidation of Starx, and its main music social entertainment platform Starmaker continued to expand to regions with high ARPU value. By the end of 2021, it had accumulated about 240 million registered users, ranking the top 5 in the music / audio download list of 82 countries in the world, ranking the first in the same category download list of countries such as South Korea, Spain and Italy, and the top 5 in the same category download list of European developed countries such as France and Belgium. We are optimistic that Starmaker will continue to expand in areas with high ARPU value, driving the company’s performance growth.
Profit forecast and investment rating: considering the fluctuation of the company’s investment business, we lowered the previous profit forecast. It is estimated that the EPS in 20222023 will be 1.53/1.80 yuan respectively (previously 2.39/2.83 yuan), and the EPS in 2024 will be increased 13 yuan, corresponding to the current share price PE is 9 / 8 / 7X respectively. As China’s leading Internet sea going platform, the company is optimistic about the coordinated development of five major businesses, the continuous release of commercialization potential and the maintenance of the “buy” rating.
Risk tip: market competition intensifies, the growth of users is less than expected, and the supervision of the game industry is becoming stricter
