[China concept Internet] last week, the NASDAQ index fell 3.82%, MSCI China Index rose 4.51%, Hang Seng Index rose 4.11% and Hang Seng technology index rose 6.08%. The top three components of Hang Seng technology index rose: Shunyu optics (+ 20.23%), Wanguo data – SW (+ 15.52%), BiliBili – SW (+ 14.56%); The top three declines: asmpacific (- 1.51%), Tencent Holdings (- 0.15%), Lenovo Group (+ 0.25%).
[A shares] last week, the media sector index rose 1.93%, the Shanghai Composite Index rose 2.02%, the Shenzhen Component Index rose 2.64%, and the gem index rose 2.51%. The top three gainers of the sector: Alpha Group(002292) (+ 35.02%), Beijing Zhidemai Technology Co.Ltd(300785) (+ 14.14%), Zhewen Pictures Group Co.Ltd(601599) (+ 13.69%); The top three declines in the sector: Beijing Gehua Catv Network Co.Ltd(600037) (- 6.81%), St Mingcheng (- 5.47%) and ST Yishang (- 4.52%).
Last week review:
[JD] announced 22q1 performance, and the overall performance exceeded market expectations. 22q1 JD group achieved a revenue of 239.7 billion yuan, a year-on-year increase of 18.0%. Bloomberg unanimously expected 236.7 billion yuan, exceeding market expectations; The net profit attributable to the parent company of GAAP was -2.99 billion yuan; The non GAAP net profit attributable to the parent company was 4.03 billion yuan, with a year-on-year increase of 1.6%. Bloomberg unanimously expected it to be 2.59 billion yuan, much higher than the market expectation; The non GAAP net interest rate attributable to the parent company reached 1.7% (2.0% in the same period last year).
[Tencent] announced 22q1 results, and the company’s revenue and profit performance were lower than market expectations. 1q22 company’s revenue was 135.5 billion yuan, which remained stable compared with the same period of last year. Bloomberg unanimously expected 141.1 billion yuan; The operating profit was 37.2 billion yuan, a year-on-year decrease of 33.9%, and Bloomberg unanimously expected 39.6 billion yuan; Non GAAP net profit was 25.5 billion yuan, a year-on-year decrease of 22.9%, and Bloomberg unanimously expected 26.4 billion yuan.
[Xiaomi] announced 22q1 performance, and the overall performance basically met market expectations. In 2022q1, Xiaomi group’s revenue was 73.35 billion yuan, with a year-on-year change of – 4.6%. Bloomberg unanimously expected that it would be 72.52 billion yuan, basically in line with market expectations; The net profit attributable to the parent company was -531 million yuan, and Bloomberg unanimously expected it to be 3.281 billion yuan, lower than expected; The adjusted net profit was 2.859 billion yuan, with a year-on-year change of – 52.9%. Bloomberg unanimously expected it to be 2.842 billion yuan, which was basically in line with market expectations. The difference between the net profit and the adjusted net profit mainly comes from the changes in the fair value of the investment.
[Netease] on May 20, the 520 press conference of Netease games shared the contents of more than 40 of its products, fully demonstrating the powerful driving force of Netease games in cultural creation. The press conference has released the latest developments of a variety of games, including the IP official publicity linkage TV animation “silver soul” of “Yin Yang division”, and there will also be a mysterious Guoman linkage plan to bring a more novel game experience; On the 20th anniversary of “Dahua journey to the west”, it created the first game national style party “wonderful journey of youth” with Henan satellite TV; Diablo: immortality, which will be launched on the whole platform on June 23, has 35 million reservations worldwide and 15 million in China; “Harry Potter: the awakening of magic” will be launched worldwide in 2022, in cooperation with four time Oscar winner Colleen Atwood.
[Kwai] on May 20, Kwai announced the official launch of the 616 real shopping festival, which will last until June 18. According to the person in charge of Kwai e-commerce products, this 616 Shopping Festival, the platform will provide 10 billion traffic and 2billion user rights subsidies to help businesses achieve the marketing outbreak during the event period, and provide 616 exclusive traffic incentives for all anchors.
[ Saturday Co.Ltd(002291) ] on May 20, the head anchor of Yuanwang network, such as childe Yu, Jia Nailiang, ACE seventh master and Li xuanzhuo, all started broadcasting, with Gmv exceeding 240 million yuan per day, setting a new record for Gmv per day. Among them, eldest childe Yu contributed about 113 million yuan to Gmv, and Jia Nailiang contributed about 90 million yuan, showing a brilliant performance.
[ Mango Excellent Media Co.Ltd(300413) ] on May 18, Hunan Satellite TV & Mango TV new ecological appreciation meeting was held in Changsha to launch the dual platform integration ceremony. Based on the two characteristic brands of “Golden Eagle solo” theater and “Mango monsoon” theater, this investment promotion meeting gathered 39 ingenious dramas to introduce the content and new marketing trend of “Hunan Satellite TV + mango TV” dual platform 2022 drama to the market. The third season of “sister riding the wind and waves” has officially started on May 20. We look forward to the performance of the new season.
Zhonggai Internet view:
Last week, the market basically continued the trend of oversold and rebound in the previous week. The overall performance of A-share and Hong Kong stock markets was relatively strong, reflecting investors’ optimistic expectations of reopening, resumption of work and production and economic recovery in the future. Last Tuesday, the “digital economy Symposium” was held as scheduled; On Friday, the central bank adjusted the LPR over five years to 4.45%, down 15 basis points from the previous month. The active setting of industrial policies and the continuous care of monetary policies are conducive to the positive performance of the Internet sector with both consumption and scientific and technological attributes and relatively low valuation.
We pointed out in the industry review “media Internet and overseas: the digital economy consultation meeting is held, the recovery of consumer Internet is in sight, and the end of performance is coming after the end of policy” released on May 18 that the convening of the digital economy consultation meeting marks the further confirmation of the “bottom of policy” of the platform economy; The orderly opening-up of Shanghai and the great promotion of 618 are approaching, the recovery of Internet and large consumption is in sight, and the “bottom of performance” may come soon. We suggest paying attention to the high-quality targets in the e-commerce / optional consumption / advertising industry that benefit from the recent policy shift and consumption recovery, including: Hong Kong stocks and zhonggai stocks: 1) platform economic enterprises with e-commerce / advertising revenue as the main source: [meituan-w, JD group SW, Kwai-w, Tencent holdings, Alibaba SW, pinduoduo, vipshop], etc; 2) Optional consumer goods companies that use e-commerce as an important channel, including: sportswear brands [Anta, Li Ning, Tebu international, 361 degrees]; Tide play faucet [bubble Mart]. A shares: 1) e-commerce MCN [ Saturday Co.Ltd(002291) Inmyshow Digital Technology (Group) Co.Ltd(600556) \ ], e-commerce agent operating enterprises [ Hangzhou Onechance Tech Corp(300792) ; 2) Advertising industry leaders [ Focus Media Information Technology Co.Ltd(002027) , Three’S Company Media Group Co.Ltd(605168) ] who are expected to benefit from the recovery of e-commerce / consumer advertising budget; 3) The consumer goods companies that can choose to use e-commerce as an important channel for e-commerce are the consumer goods companies that can choose to be an alternative consumer that will channel e-commerce as an important channel. These include [ Hongda Xingye Co.Ltd(002002) 891 ] etc.
On April 7, we released a 74 page meituan in-depth report: “meituan-w (3690. HK): the” search engine “of local life and” three curves “connecting the past and the future”, which made an in-depth analysis of the growth space and profit prospects of meituan’s businesses, and briefly discussed the development trend of fresh e-commerce industry.
On April 29, we released a 58 page Kwai in-depth report: Kwai -w (1024.hk) in-depth report: a distinctive short video leader, and continued to build a super commercial complex. We analyzed in detail the broad space of the short video track where Kwai is located and the unique competitive advantages of Kwai, and gave our valuation methods and investment suggestions.
We suggest that investors grasp the significant opportunity of bottom reversal and actively layout high-quality Internet leading enterprises. Focus on the Internet: 1. The Mesozoic consumer Internet company [meituan-w], with good performance growth and strong long-term competitiveness, has been selected as Xinda [top 10 gold stocks in May]; 2. The short video platform [Kwai-w], with clear loss reduction expectation, superior business model and continuously suppressed valuation, has been selected as the [golden stock of media industry in May]. Suggestions: 1. E-commerce giant [JD group SW] with unique barriers, resilient growth and expected significant improvement in profit margin; 2. The performance and valuation are still at the bottom, waiting patiently for the industry leading companies on the right [Tencent, Alibaba SW]; 3. Stable performance growth and profit margin, low PE quality company [netease-s, pinduoduo]; 4. Comply with the policy tone and layout [Baidu group SW] in the field of new technology.
Comments on recent events:
Event: Recently, the general office of the CPC Central Committee and the general office of the State Council issued the opinions on promoting the implementation of the national cultural digitization strategy, put forward eight key tasks, accelerate the digital layout of the cultural industry, and cultivate a number of new cultural enterprises in the fields of cultural data collection, processing, trading, distribution and presentation. First, make overall use of the achievements of digital projects and databases built or under construction in the field of culture to form a database of Chinese culture. Second, consolidate the cultural digital infrastructure and form a national cultural network by relying on the existing cable TV network facilities, radio and television 5g network and interconnection platform. Third, encourage multiple subjects to jointly build a cultural data service platform based on the national cultural network. Fourth, encourage and support all kinds of cultural institutions to access the national cultural network and explore effective ways of digital transformation and upgrading by using the cultural data service platform. Fifth, develop new scenes of digital cultural consumption, and vigorously develop new digital cultural experience of Wuxi Online Offline Communication Information Technology Co.Ltd(300959) integration and online presence. Sixth, comprehensively promote the construction of national cultural big data system, National Smart Library System and public cultural cloud, enhance the supply capacity of public cultural digital content and improve the digital level of public cultural services. Seventh, accelerate the digital layout of the cultural industry, cultivate a number of new cultural enterprises in the fields of cultural data collection, processing, trading, distribution and presentation, and lead the digital construction direction of the cultural industry. Eighth, build a cultural digital governance system, improve the comprehensive law enforcement system of the cultural market, and strengthen the transaction supervision of the cultural data element market.
Viewpoint: we believe that the two offices issued “accelerating the digital layout of cultural industry” and put forward eight key tasks, including “Chinese Culture Database”, “giving full play to the role of cable and radio and television infrastructure to form a special cultural network”, “cultural data service voucher” Such as the “national cultural network” and the “national cultural network” and so on, and special reminders of the new media platform of radio and television will be especially prompted for the new media platform [ Mango Excellent Media Co.Ltd(300413) andits equipment supplier [ Beijing Jetsen Technology Co.Ltd(300182) ] [ Three’S Company Media Group Co.Ltd(605168) , Xinhuanetco.Ltd(603888) , Zhewen Interactive Group Co.Ltd(600986) ], etc., which cooperate with the cultural exchange to establish a digital cultural content trading platform, are generally beneficial to the A-share media sector, especially the IP value of Chinese culture such as games, film and television, animation and so on.
A shares focus on:
[ Wuhu 37 Interactive Entertainment Network Technology Group Co.Ltd(002555) ] the main games in China and overseas markets have maintained good performance. The company’s overseas brand 37games has covered many countries and regions. The types of games include SLG, MMORPG, simulation operation, cards, etc. in 21 years, the highest monthly flow of mobile games issued overseas by the company exceeded 700 million; Among them, “Puzzles & survival” has accumulated more than 2.5 billion yuan by December 2021, and has successfully ranked fourth in the global mobile game revenue growth list in 2021 according to sensortower. Overseas head products “Puzzles & survival” and “song of Cloud City” are expected to increase the overall net interest rate with the recovery of initial cost investment. The company has abundant reserves of new games, the Chinese market version number has been released again, Wuhu 37 Interactive Entertainment Network Technology Group Co.Ltd(002555) dream voyage has been approved, and self-developed products such as light handed down (version number has been obtained in 21 years), code magic m, code Three Kingdoms by, code C6, code AOE and code women to CY have been reserved, laying a solid foundation for performance growth in 23-24 years. The company’s performance in the whole year of 21 and 22q1 exceeded expectations, the performance of new travel and performance in the whole year of 22 was expected, and employee motivation showed confidence. According to the latest appraisal target of the employee stock ownership plan released by the company on April 26, the growth rate of operating revenue in 22 / 23 / 24 years shall not be less than 15% / 25% / 35% (the operating revenue shall not be less than 186.48/202.7021892 billion yuan), or the growth rate of net profit shall not be less than 15% / 25% / 35% (the net profit shall not be less than 33.07/35.953883 billion yuan). In the near future, we need to pay attention to the landing of the second batch of version numbers, the normalization of version numbers and the promotion of certainty.
[ Perfect World Co.Ltd(002624) ] in 2021, the company was in the stage of transformation, and the performance was lower than expected due to the superposition of multiple factors. The company’s products will focus on youth and long-term development. The product ideas will focus on the two tracks of “MMO +” and “card +”, and the globalization process will continue to advance. The “water tower” version of “water tower” is expected to be upgraded. In addition, “magic tower” has opened overseas release test in Japan, Europe and the United States and other mainstream regions in April. The iteration of Chinese version and overseas market have effectively extended the full life cycle value of leading products. The company has abundant game reserves. Product versions such as Tianlong Babu 2, the country of morning and night and black cat news agency have been prepared. At present, they are waiting for the release of version numbers. The overseas market is expected to go online within this year to contribute incremental performance to the company. On April 11, the release of the game version number was resumed, the version number was normalized and the content supply was stable, and the game went to sea to form a new increment. In the near future, we need to pay attention to the landing of the second batch of version numbers, the normalization of version numbers and the promotion of certainty.
[ G-Bits Network Technology(Xiamen)Co.Ltd(603444) ] the company lays out a diversified product matrix, covering game categories such as placement and cultivation, simulation operation, roguelike and SLG, and adheres to “high-quality” and long-term operation. The stock games such as “ask for a hand tour” and “one read carefree” have a stable performance, and the game version numbers that can be issued in 22 years are abundant. The long-term operation of “ask for a hand tour” is stable, and the long-term flow continues to maintain a good trend. The 6th anniversary service was opened on April 22, which is expected to further improve the flow; “Yinian Xiaoyao” has maintained its buying volume since it was launched on February 1, 2001. Now it has become a leader in Xiuxian’s category; “Obi Island: dream country”, which was represented by thunder for 22 years, opened the omni channel payment test on April 28. The company also reserves a variety of games such as “dawn elite”, “flowers fall in Chang’an”, “lost territory”, “store legend”, “family story (M66)” and so on, laying the foundation for 23-24 years of performance. In the near future, we need to pay attention to the landing of the second batch of version numbers, the normalization of version numbers and the promotion of certainty.
[ Focus Media Information Technology Co.Ltd(002027) ] in 2021, the macro economy recovered and the overall advertising industry showed a year-on-year recovery. Quarter by quarter, due to the base number and macro fluctuations in the second half of the year, the recovery was high before and low after, the growth of 21q4 industry was weak, the impact of 22h1 epidemic was under short-term pressure, and the profitability recovered after the 22h2 epidemic recovered and the company fought for the reduction of epidemic rent.
[ Mango Excellent Media Co.Ltd(300413) ] as a party media and state-owned enterprise, the company complies with the development trend of deep integration of media, and continuously strengthens the guidance of media value and independent innovation of content. The company takes the content of high threshold and long video platform as the king, takes the needs of the times, social emotions and people’s attention as the main direction of content innovation, continues to build a high-quality, benign and sustainable content ecology, and has made steady progress and improved the quality of various businesses in the past 21 years. In the second quarter of the year, there will be a head variety “sound without rest”
