\u3000\u3000 Zhejiang Century Huatong Group Co.Ltd(002602) (002602)
Recommendation logic: 1) evergreen “legend” IP revenue grew steadily, exclusive authorization, adaptation rights and other rights and interests were finally settled within 21 years Zhejiang Century Huatong Group Co.Ltd(002602) , and the creation of legendary metauniverse is expected; 2) Livetopia, the first product of meta universe concept, has become a phenomenal product, and the market space of meta universe type is broad; 3) In the product year of 2022, Zhejiang Century Huatong Group Co.Ltd(002602) self-developed projects at home and abroad have made great efforts. In the follow-up pipeline, “famine” and “golden hymn of Qiao Qiao’s wonderful adventure” have high expectations. It is expected that the company’s revenue will increase significantly in 22 years; 4) The binding with Tencent, the major shareholder, has been further deepened, and the depth of cooperation has been continuously expanded from the layout of upstream IDC to the distribution of downstream games. The strong alliance has further consolidated the company’s position as a major manufacturer of Tier1 games in China.
Legend IP: Legend IP has a far-reaching impact on the whole game market. Since 2001, hot blood legend (commonly known as “legend”) has been online for more than 20 years. Under the action of a variety of products, the Chinese game market has formed a familiar “legend” category, with a total of more than 600 million registered users. With the support of the huge “legend” IP user group, the flow of “legend” category games in the Chinese market has remained strong, and the annual flow has always remained above 10 billion yuan. We believe that the company’s revenue on “legendary” IP will continue to grow strongly in the future.
Create a meta cosmic phenomenal product “livetopia”: at the moment when the concept of meta universe continues to ferment, Zhejiang Century Huatong Group Co.Ltd(002602) takes the lead in entering the metaverse era. In April 2021, its little bit interactive self-developed game “livetopia” was launched on the roblox platform, with more than 40 million monthly active users, a peak of 5 million daily active users and more than 100 million users. In the seven months since its launch, it has exceeded one billion visits, becoming the top three in the world and the first image product in China on the roblox platform. Zhejiang Century Huatong Group Co.Ltd(002602) relying on its rich experience in game R & D and operation, it takes the lead in launching the development and operation of metauniverse game content and actively seize the market.
Self research projects at home and abroad: cooperate with Tencent to release 4 products such as “Celebrating more years”, and launch 3 well-known IP adaptation games such as “lovelive! School idol season: stars shining”; The famine and JOJO IP launched in the new type of game market with active layout of the second dimension and facing generation Z have high popularity and expand the player group.
Profit forecast and investment suggestions: it is estimated that the company will achieve revenue of RMB 13.718/20.909/25.609 billion from 2021 to 2023, and the corresponding EPS is RMB 0.43/0.54/0.67 respectively; In combination with the rising expectation of the overall market valuation and the fact that the company is a leader in the industry and has high performance visibility, a certain valuation premium can be given, with a 22-year 20xpe, corresponding to the target price of RMB 10.80, and a “buy” rating for the first time.
Risk tip: the game supervision is stronger than expected, resulting in the suspension of game launch or the suppression of sector valuation; The cooperative resolution of the legendary copyright issue was slower than expected.
