\u3000\u3 China Vanke Co.Ltd(000002) 517 Kingnet Network Co.Ltd(002517) )
Core view
High performance growth. The company released the annual report of 2021 and the quarterly report of January 22: 1) in the whole year of 21, the operating revenue was 2.375 billion yuan and the net profit attributable to the parent company was 577 million yuan, with a year-on-year increase of 54% and 224% respectively, corresponding to the fully diluted eps0 27 yuan; Among them, Q4 achieved an operating revenue of 725 million yuan and a net profit attributable to the parent company of 75 million yuan, with a year-on-year increase of 72% and 463% respectively, corresponding to eps0 03 yuan; 2) In 2012, Q1 achieved 1.029 billion yuan and net profit attributable to parent company 248 million yuan, with a year-on-year increase of 130% and 67% respectively, corresponding to eps0.5% 12 yuan, continuing to maintain a high growth trend; The high performance increase is mainly due to the good performance of many games such as "primitive legend", "battle of angels", "Legend of the king", "high-energy hand-held group", "hot blood attack" and so on; 3) In 2021, there will be no profit distribution, nor will the capital reserve be converted into share capital.
The three business segments continue to make efforts. The company takes "focusing on the main business of games" as the core strategic direction and is supported by three business segments: R & D, distribution and investment + IP. 1) In terms of R & D, legendary games continue to take the lead, and the cumulative flow of "Legend of the blue moon" has exceeded 4 billion yuan; The mobile game "Legend of the blue moon 2" was launched in January 21, and entered the top 50 of China's IOS game bestsellers. At present, the company operates legendary games, including blue moon products such as blue moon legend and Blue Moon Legend 2, as well as well-known games such as legend of the king and primitive legend; The non legendary category launched MMORPG game "swordsman in Black: trump card", card game "Legend of demon heroes", real-time game "dare to fight against each other"; 2) The distribution business takes the XY distribution platform (XY. Com) as the core. Among them, the biography of demon heroes has won the first place in the free list of IOS games, the seventh place in the best-selling list of games and the second place in the best-selling list of cards; "Zero front" won the first place in the free list of IOS games on the first day of its launch; 3) Invest in + IP services, and invest in new targets such as digital raccoon, Qianjing network, dynamic titanium network and optical particle network; In terms of IP, IP strategy is promoted through IP introduction, IP investment and IP incubation. Four top-level IP licenses (Douluo mainland, tomb robbing notes, legend of fairy sword and chivalry, and about my reincarnation into shrem) have been added, and well-known IPS such as "legendary world", "hot blood series", "sword God domain", "Legend of demon God hero", "mobile warrior dare series", "journey to the west" and "Fengshen series" have been accumulated.
Risk warning: the product flow does not meet the expected risk; Risk that the online rhythm does not meet the expectations; Corporate governance risk; Regulatory policy risk, etc.
Investment suggestions: pay attention to product performance, corporate governance improvement, strategy implementation, and maintain the "overweight" rating.
We expect the net profit attributable to the parent company from 2022 to 2024 to be RMB 779 / 1002 / 1236 million, with a year-on-year growth rate of 35 / 29 / 23%; Diluted EPS = 0.36/0.47/0.57 yuan, and the current share price corresponds to PE = 12.5/9.7/7.9x. Driven by the launch of new products, self research + issuance + investment / IP, the performance has achieved high growth, the long-term growth momentum continues to improve under the improvement of corporate governance, the medium and long-term layout of self research + game going to sea + meta universe focuses on future growth, the sector valuation may be repaired upward under the restart of edition number + the warming of Internet regulatory policy, and there is a large upward repair elasticity under the current undervalued value, so as to maintain the "overweight" rating.
