\u3000\u3000 Shanghai Yaoji Technology Co.Ltd(002605) (002605)
Realize the business transformation from the traditional main business to the Internet. Shanghai Yaoji Technology Co.Ltd(002605) as a leading enterprise in China’s poker industry, it has actively sought online transformation in recent years. Since 2018, the company has successively laid out two major fields of mobile games and digital marketing through acquisitions, and successfully created a new growth engine. In H1 2021, the revenue side game, digital marketing and poker “troika” will work together, accounting for 32.07% / 40.28% / 26.22% of revenue and 76.68% / 4.91% / 16.40% of gross profit respectively. Games contribute the main profits, Sustained and healthy growth in the past three years.
Mobile game business: Chinese fishing games are growing steadily, and overseas bingo game space can be expected. Through the acquisition of Chengqi technology and big fish competition, the company has made a comprehensive layout of Chinese fishing, chess and cards and overseas bingo games. In recent years, the company has expanded the recruitment of game R & D personnel on a large scale, reaching 687 people (+ 126.73%) in 20 years. 1) The list of Chinese fishing games is outstanding, contributing 89% of the game revenue. As a fishing head operator, Chengqi technology has obvious flow advantages and excellent profitability. By the first half of 2021, the company had more than 70 million mobile game users, and its product fingertip fishing – Happy fishing game battle ranked third in the regional revenue list in the first half of ios21. In addition, Yaoji fishing 3D was launched at the end of 21, and the product iteration extended the life cycle; 2) Overseas bingo games have the characteristics of strong gold absorption and long life cycle. With strong self-development ability and long-term operation ability of products, big fish sports has its core product bingoparty, which has been online for one year, and its revenue has ranked among the top 3 in the world of bingo category. In the future, the company is expected to open the growth space of overseas games through the landing of new products in bingo, solitaire and other sectors.
Digital marketing business: rely on Luming technology to deeply cultivate the short video marketing track. In 2019, the company acquired Luming technology to build a one-stop professional marketing business with information flow advertising marketing as the core and content marketing as the supplement. Most of its customers are leading companies in various industries. In 2020, Luming technology completed the wholly-owned acquisition, with comprehensive consolidated performance, and achieved a revenue of more than 1.2 billion yuan in that year. Short video marketing is an important strategic development direction in the future. With the young team’s professional and in-depth understanding of the marketing industry, yao ji is expected to quickly accumulate external customers and achieve performance growth.
Poker business: the leading position is firm and the production capacity layout is optimized. Since 2015, the company has taken a number of measures such as automatic production, capacity expansion and Qidong base plan to build a comprehensive industrial park to promote the cost reduction and efficiency increase of poker business. In 2020, the company successfully completed the transfer of production capacity from Shanghai and Zhejiang Wanshengda base to Qidong base. In 2021, the company issued a plan for convertible bonds. The total amount of funds to be raised is no more than 823 million yuan, of which 583 million yuan is used to invest in the construction of a production base with an annual output of 600 million pairs of playing cards, optimizing the production capacity layout and consolidating the leading position.
Investment suggestion: we predict that the company’s revenue from 2021 to 2023 will be RMB 3.935/5.244/6.504 billion respectively, with a year-on-year increase of 53.6% / 33.3% / 24%, and the net profit will be RMB 566 / 6.81/830 million respectively, with a year-on-year increase of – 48.2% / 20.3% / 21.9%. The corresponding closing price PE on January 13 was 20.9/17.4/14.3 respectively. Considering the company’s continuous growth and the possibility of the expansion of the company’s overseas business in China by emerging blockchain technologies in the meta universe era, if pe27 times is given, the corresponding market value of the company is 18.5 billion yuan and the corresponding target price is 45.8 yuan / share.
Risk warning: policy supervision risk; Risk of changes in cooperation policies of platform parties; Marketing development is less than expected; Core business cost risk; Multi domain layout management risk; Recent stock price changes.
