\u3000\u3 China Vanke Co.Ltd(000002) 555 Wuhu 37 Interactive Entertainment Network Technology Group Co.Ltd(002555) )
Core view
Q1 performance maintained high growth. In 2022, Q1 company realized an operating revenue of RMB 4.089 billion and a net profit attributable to the parent company of RMB 760 million, with a year-on-year increase of 7.11% and 550.80% respectively, corresponding to EPS of RMB 0.35, in line with the market and our expectations (the company’s performance forecast shows that the net profit attributable to the parent company in the first quarter is RMB 740770 million); The net profit deducted from non parent company was 762 million yuan, with a year-on-year increase of 19774%. The high performance growth mainly benefited from the low base in the first quarter of last year and the excellent performance of new products and going to sea.
The gross profit margin remained stable and the sales expense rate decreased significantly. The gross profit margin and net profit margin of Q1 company were 86.3% and 18.4% respectively. The gross profit margin was basically the same as that of the same period last year, and the net profit margin increased by 15 percentage points, which mainly benefited from the significant decrease in the sales expense rate (from 73.3% in the same period last year to 56.4% in Q1 this year, a decrease of 17 percentage points, mainly due to the significant increase in the expense rate caused by the pre purchase cost in Q1 last year); The management fee rate was basically stable, Q1 was 2.6%, a decrease of 0.1 percentage points compared with the same period last year.
High quality products, diversification and market globalization continued to advance. 1) Since the release of the great soul duel: the master of the world, and the outstanding performance of the great soul duel: the 21st year of the world. Among them, “Douluo mainland: duel between soul masters” has performed well since its launch, ranking the top 4 in the best-selling list of IOS games, ranking 11th on average, verifying the company’s boutique strategy. At the same time, the project approval categories of self-developed reserve products involve multiple categories such as MMORPG, SLG, card and simulated operation, and the product categories continue to be diversified; 2) The overseas strategy has been continuously promoted, with a revenue of 4.777 billion yuan in 21 years, accounting for 29.5% of the revenue; The overseas brand 37games covers many countries and regions, and the types of games include SLG, MMORPG, simulation operation, cards, etc. During the reporting period, the maximum monthly flow of mobile games issued overseas by the company exceeded 700 million, the total number of new registered users exceeded 55 million, the maximum monthly active users exceeded 8.5 million, and the performance of overseas business was excellent; 3) In terms of new products, in 2022, the company adhered to the strategy of high-quality products, diversification and market globalization, and reserved nearly 30 products at home and abroad through self-research, agency and customization, which is expected to promote the company’s game business to continue to maintain high growth.
Risk tip: the flow of new game products does not meet expectations; The profit of going to sea is lower than expected; Regulatory policy risk, etc.
Investment advice: maintain the profit forecast and maintain the “buy” rating.
Maintain the profit forecast and maintain the “buy” rating. It is estimated that the net profit attributable to the parent company in 2022, 23 and 24 will be 3.33/38/4.3 billion yuan respectively, with a year-on-year growth rate of 16 / 15 / 12%; Diluted EPS = 1.50/1.72/1.92 yuan, and the current share price corresponds to PE = 16 / 14 / 13X. The company’s issuance business continues to maintain a leading position, its product self-research performance is good, its overseas expansion is smooth, the version number is restarted, and the performance and valuation may be improved under the improvement of industry prosperity, so it continues to maintain the “buy” rating.
