\u3000\u3 China Vanke Co.Ltd(000002) 624 Perfect World Co.Ltd(002624) )
Event overview
According to the company’s 2021 annual report and the first quarterly report of 2022, the company achieved a revenue of RMB 8.518 billion in 2021, a year-on-year decrease of 16.69%, and the net profit attributable to the parent company was RMB 369 million, a year-on-year decrease of 76.16%. The revenue of game business was 7.421 billion yuan, a year-on-year decrease of 19.77%; The revenue of film and television business was 952 million yuan, a year-on-year increase of 1.84%. In the first quarter of 2022, the company realized an operating revenue of 2.128 billion yuan, an increase of 2.34% year-on-year after excluding the impact of the sale of European and American subsidiaries, including 1.973 billion yuan in game business, an increase of 23.01% year-on-year, and 77 million yuan in film and television business, a decrease of 80.48% year-on-year; The net profit attributable to the parent company was 840 million yuan, a year-on-year increase of 80.99%, deducting the net profit not attributable to the parent company of 414 million yuan, a year-on-year increase of 30.15%, of which the net profit of game business was 864 million yuan, a year-on-year increase of 102.27%.
Business structure was adjusted, gross profit was improved, and R & D investment increased significantly
In the first quarter of 2022, the company’s game business realized a revenue of 1.973 billion yuan, an increase of 23.01% year-on-year. New tours such as “dream new kill immortal” and “magic tower” entered the profit release period. The gross profit margin of the game business increased and significantly thickened the performance. With the decline of film and television business revenue and the adjustment of business structure, the overall gross profit margin of the company increased to 68.65% from 56.56% in the same period of last year; In the first quarter, the R & D cost was about 564 million yuan, with a year-on-year increase of 35.90%, mainly due to the increase in the number of research projects and the improvement of the incentive mechanism for core R & D personnel in the transformation stage. The company will increase the inclination of resources and focus on the advantageous R & D direction in the future. It is expected that the R & D cost will fall down with the end of the stage of streamlining projects and optimizing talent echelon.
Magic tower 2.0 went online to gain reputation, and Tencent subsidiary went to sea as an agent
On April 25, the new version of “magic tower” was launched, with the introduction of new maps and new mimicry roles. The ranking of major lists increased significantly. The market feedback was good and boosted the reputation. The distribution right was granted to levelinfinite, an overseas distribution subsidiary of Tencent. It is expected to be officially launched overseas within the year. The company will adjust the layout of overseas games in time. In the future, it will focus on advantageous regions and categories, with “MMO +”, “multi person opening” and “card +” as the main tracks. The existing reserve themes will also focus on overseas distribution, Reserve a variety of mobile games such as “black cat anecdote society”, “Tianlong Babu 2”, “Kingdom of morning and night”, “punch Superman: the world”, “million Arthur”, “Zhuxian 2”, “perfect Shanghai New World Co.Ltd(600628) “, “Shenmo mainland 2” and many end game products such as “Zhuxian world”, “perfectnewworld” and “haveanicedeath”. It is expected that the version number will be launched at home and abroad after the rhythm is restored.
High dividend returns to shareholders and sufficient cash reserves during the transition period
The company’s 2021 profit distribution plan plans to distribute cash dividends of 12 yuan (including tax) to all shareholders for every 10 shares, with a total dividend of 2.290 billion yuan. Calculated according to the closing price on the day of announcement of the dividend plan, the corresponding dividend rate is about 10%. In the first quarter of 2022, the net inflow of cash flow from operating activities was 87 million yuan, a year-on-year increase of 123.50%. The company is in the strategic transformation stage of track focus and light loading. High score red shows good cash flow and boosts shareholders’ confidence.
Investment suggestion: maintain the “overweight rating”
Combined with the latest financial report of the company, we adjusted the forecast of the company’s revenue of 10.336/11.972 / (unpredicted) billion yuan in 20222024 to 9.950/11.702/13.301 billion yuan, the forecast of net profit attributable to the parent company of 1.737/20.61 / (unpredicted) billion yuan in 20222024 to 1.742/20.71/2.387 billion yuan, and adjusted eps0.01 billion yuan The forecast of 90 / 1.06 / (unpredicted) yuan is 0.90/1.07/1.23 yuan, corresponding to the closing price of 14.77 yuan / share on April 29, 2022, and PE is 16, 14 and 12 times respectively. The company is a game company with strong R & D strength with scarce a shares. At present, the stock price valuation level is at a historical low. With the re issuance of the version number, we are optimistic about the future rise space of the company’s stock price and maintain the “overweight” rating.
Risk tips
Game version number policy shrinkage risk; Xinyou test is less than expected risk; Risk of cancellation of preferential tax policies; Brain drain risk.
