\u3000\u3000 Perfect World Co.Ltd(002624) (002624)
Perfect World Co.Ltd(002624) disclosed the performance forecast for 21 years, and it is expected to realize the net profit attributable to the parent company of 350-390 million yuan, a year-on-year decrease of 77.4% – 74.81%; The net profit after deducting non-profit was RMB 100-120 million, a year-on-year decrease of 90.42% – 88.50%. Split in a single quarter, 21q4 expects a net loss of 410-450 million yuan in a single quarter. The company’s game business is expected to achieve a profit of 670-690 million yuan in 21 years, a year-on-year decrease of 70.68% – 69.81%; The film and television business is expected to incur a loss of 170 million yuan to 190 million yuan due to the impairment of the single investment of Universal Pictures.
In terms of game business, as the business is in the key stage of strategic upgrading and product innovation iteration, there is periodic pressure on the performance in the transition period. In the past 21 years, the company launched five products, such as extraordinary hero salvation, old legend, Ares relic, dream new immortal and magic tower. Among them, dream new immortal was launched on June 25, with a cumulative flow of nearly 1.6 billion in 21 years. Magic tower was put into public beta on December 16, 21, with more than 10 million new users in the first month and nearly 500 million yuan in the first month. However, as the company’s game business is still in the transformation period of new and old drivers, layout adjustment, personnel optimization and the connection of new and old products put pressure on the game performance in the short term. The specific reasons for the spin off are as follows: 1) 21q2 shut down some overseas game projects whose performance did not meet expectations, resulting in a one-time loss of about 270 million yuan; 2) The company will gradually streamline projects that are less consistent with the company’s development objectives and promote the optimization of talent echelon; At the same time, in order to better motivate the core R & D team, a series of supporting mechanisms to encourage innovation, such as adjusting the salary policy, have been introduced, resulting in an increase in personnel optimization expenditure and R & D investment; 3) Some of the company’s games naturally declined with the life cycle, the water flow naturally fell compared with the high base under the background of the epidemic in the same period of last year, and some games did not meet expectations. Due to its launch in December, the profit contribution of magic tower has not been reflected in the reporting period and will be released gradually in 22 years; 4) The company invested in some games and upstream and downstream related enterprises, and the profit decreased in 2021, resulting in a decrease in the investment income of associated enterprises included in the company’s recurring profits and losses.
In terms of film and television business, the company continues to accelerate the issuance and scheduling of inventory projects, and adopts a more focused strategy in the initiation and startup of new projects; The impairment of global single chip investment fund in 21 years has had an impact. In 2016, the company’s fund signed a single film investment and strategic cooperation agreement with universal pictures, and the income of some film projects was lower than expected. According to the proportion of the company’s share in the fund, the net profit attributable to the company’s shareholders decreased by about 260 million yuan, which was included in non recurring losses.
In the past 22 years, the company has rich game reserves. In the research and development of many blockbuster games such as Tianlong Babu 2, punch Superman: the world, million King Arthur, the kingdom of morning and night, Zhuxian 2, perfect Shanghai New World Co.Ltd(600628) mobile game and Zhuxian world end game, the development of well-known IP games such as Linglong and Fengshen series is also actively promoted.
Investment suggestions: Perfect World Co.Ltd(002624) on the basis of continuously expanding the competitive advantages of core categories such as MMORPG, accelerate the implementation of diversification and youth strategy, and uphold the long-term concept. Although there is short-term performance pressure in the transformation process, with the centralized embodiment of personnel costs and impairment in 21 years, the performance release of magic tower in 22 years and the launch of new products, the company is expected to gradually restore the rhythm of performance growth under the new product cycle. Considering the 21-year performance forecast and the new game rhythm, we lowered the net profit attributable to the parent company from 2021 to 2023 to 368 million / 2.013 billion / 2.094 billion yuan (the previous value was 1.30 billion / 2.49 billion / 2.92 billion yuan), and the corresponding PE was 77.2x/14.1x/13.6x respectively, maintaining the buy rating.
Risk tip: the online delay of the game, the flow of the game does not meet the expectations, the confirmation of film and television projects does not meet the expectations, the industry supervision is becoming stricter, and the performance forecast is only the preliminary calculation results. Please refer to the annual performance announcement.
