\u3000\u3000 Perfect World Co.Ltd(002624) (002624)
Event: on January 23, the company released the performance forecast of 2021 annual report. The forecast shows that the net profit attributable to the parent company in 2021 is between 350 million and 390 million yuan, a year-on-year decrease of 74.81% - 77.40%. The net profit attributable to the parent company in the fourth quarter was between - 450 million yuan and - 410 million yuan. The company held an online performance briefing on the same day to interpret the performance forecast.
Comments:
Before the dawn of game brand strategic transformation, the team optimization incentive affected the profits in the fourth quarter: the loss of the company in the fourth quarter was mainly caused by the one-time optimization investment in the strategic transformation of game business and the loss of early film and television investment. In terms of game business, the company is in the key stage of strategic upgrading and product innovation iteration, and its future product planning will mainly develop MMO and card track. In the fourth quarter, the company streamlined and optimized the project team with low fit, resulting in high one-time personnel optimization expenditure. At the same time, after the launch of magic tower, the company reissued the bonus for the whole year of 2021 to maintain the stability of the team, reorganized the bonus and salary structure, and launched a more flexible, flexible and basic guarantee policy. As a result, the impact on the financial report was concentrated in the fourth quarter, which seriously affected the profit performance. According to the company's analysis data, after deducting the impact of the above bonuses and salaries, as well as the losses of the invested enterprises and the losses caused by the mismatch of revenue and cost at the initial stage of the launch of magic tower, the profit of the game business in the fourth quarter was about 200-300 million yuan. For the whole year of 2021, the company's game business is expected to achieve a profit of 670 million yuan to 690 million yuan, of which the non recurring income is about 490 million yuan, mainly from the disposal of some R & D teams.
The global epidemic affected the box office performance, and the film single investment confirmed a large loss: the company had impaired the film and television projects in the early stage, and the new loss mainly came from the film single investment. In 2016, the company's fund signed a single film investment agreement with universal pictures to make a long-term investment in about 50 films. In 2021, the global epidemic was repeated, the income of some film projects was lower than the previous prediction, the fair value of the film decreased, and the company lost about 260 million yuan in the film investment. In 2021, the company broadcast a total of 14 film and television dramas, more than half of which are inventory dramas. On the one hand, it accelerated the digestion of inventory, on the other hand, it was more focused and cautious in the initiation and startup of new projects. The vast majority of newly launched projects are platform customized dramas, ensuring the certainty of revenue. After deducting the non recurring losses caused by global film single investment, the film and television business achieved a profit of 70 million yuan to 90 million yuan in 2021.
The kinetic energy of new and old projects was transformed, and "dream new kill immortal" contributed 1.6 billion water: in 2021, the company's transformation strategy experienced track exploration, structure adjustment and route confirmation. In terms of new games, the company actively promoted the iterative upgrading of classic products and the breakthrough transformation of emerging categories, and successively launched the first horizontal version of action single player mobile game "extraordinary heroes save the world", the first roguelike card mobile game "old legend", the first mmoarpg mobile game "remains of God of war", and the first innovative round MMORPG mobile game "dream new kill immortal" The first light sci-fi open world mobile game "magic tower" and other five products. The main contribution of running water in 2021 is "dream new killing immortal", which was launched on June 25. The accumulated running water in the whole year is nearly 1.6 billion yuan and the profit is about 500-600 million yuan. Among the old tour projects, the basic performance of the end tour is stable, while the flow of the mobile tour projects "Zhu Xian", "002624}" and "Xin Xiaoao Jianghu" has fallen sharply under the high base. Some new exploration games are not performing well. The water flow of MMO mobile game "ares remains" was less than expected. The North American project "magic Legends" was shut down in the second quarter, and the two games lost a total of 400-500 million yuan.
"Magic tower" broke through a new group of players, developed categories and expanded the company's advantages in meta universe exploration: the company's self-developed light science fiction open world game "magic tower" opened its public beta on December 16, realizing a flow of 500 million yuan in the first month, ranking first in the free list of IOS games for 6 consecutive days. On January 26, 2022, the new version of "magic tower" linked with the domestic head animation IP "spirit cage" will be launched. The company is expected to launch the overseas version of magic tower in mid-2022, and plans to release it globally and simultaneously. The company's fine polishing of the "magic tower" project has laid a solid foundation for exploring the R & D and operation of younger categories in the future. Its multi person open world playing method has explored a successful model for the transformation of the company's traditional MMO products. The company's new games will be younger, longer-term, more open, and impress players with good content and real playability. At the same time, the key layout of development categories will also help the company to continue to expand its first mover advantages in the fields of technology, engine and virtual digital human under the prospect of open world of meta universe.
The film and television business has developed steadily, and many high-quality dramas have been broadcast one after another: in 2021, the company continued to accelerate the issuance and scheduling of inventory projects, and adopted a more focused strategy in the project initiation and startup of new projects, The production items include Shangyang Fu, eye of the storm, love under the starry sky, we'll have a good life tomorrow, little girl's neon clothes, ideal shines on China, warm taste, glory and dream, high ambition, sudden vacation, who give me up, peak explosion, Xiaguang and the boat of peace. At present, the company reserves "glazed tiles in the past", "picturesque green mountains in the moon", "biography of Yunxiang", "let your years be quiet", "stars condense into sugar", "rock crazy flowers", "special agent mission" and "brilliant! Brilliant!" Film and television works such as "wish comes true" are in the process of production and distribution. The company's film and television business will adopt the strategy of small steps and fast running, continue to maintain the overall production ability of film and television, focus on risk control and income protection, select content with social topics or in line with the aesthetics of young people in the theme, and promote the publicity and distribution with Internet thinking, so as to ensure the steady development of film and television business.
According to the company's performance forecast, we adjusted the company's performance expectation from 2021 to 2023. It is expected that the company will realize an operating revenue of RMB 8.53/105.2/12.13 billion from 2021 to 2023, with a year-on-year increase of - 16.6% / 23.4% / 15.3%, a net profit attributable to the parent company of RMB 3.7/9.5/1.17 billion, with a year-on-year increase of - 76.0% / 156.6% / 23.3%, corresponding to EPS of RMB 0.18/0.45/0.56 and PE of 78.6x/30.6x/24.8x. We believe that the company's reasonable price earnings ratio is 38 times, and the target price in 2022 is 17.1 yuan, maintaining the "buy" rating.
Risk tip: the promotion of Xinyou is not as expected; Changes in national game regulatory policies; The promotion of film and television projects was less than expected
