\u3000\u3000 Kingnet Network Co.Ltd(002517) (002517)
Event: the company recently released a performance forecast. In 2021, the company expects to realize a net profit attributable to the parent company of 550-650 million yuan, a year-on-year increase of 209% - 265%, and a net profit attributable to the parent company of 430-560 million yuan after deduction, a year-on-year increase of 457% - 625%.
The continuous iteration of mobile game products is the main driver of the company's performance growth. The substantial improvement of the company's performance is mainly due to the good iteration of new and old products. The company's original games such as original legend, legend of the king and high energy hand group continue to contribute relatively stable revenue and profits in 2021, and the new online games such as hot blood attack "Swordsman in Black: trump card" and "Legend of demon heroes" and other games performed well. In addition, the company sold part of the equity of its participating companies xinguangliumei and Hangzhou Tengmu, resulting in an investment income of more than 100 million yuan. At the same time, some shares and equity investments held by the company formed a certain change in fair value, resulting in non recurring profits and losses of 90-120 million yuan. Overall, the company's net profit attributable to the parent company in 2021 is in line with expectations, the company's moat in the field of legendary games is stable, and the exploration of breaking the circle of innovative products is fruitful.
With multi-dimensional IP empowerment, the company may usher in a new year of products. The products that the company plans to launch in 2022 include four IP tracks. In addition to continuing to launch new products in heavy IP such as legends and miracles, the company will also launch light IP products "fairy sword and chivalry - a new beginning", literary and comic IP products "journey to the west of the eight Dragon gods", "killing dragons by relying on heaven", and original IP products "true story of Monsters 2". It is expected that with the support of all kinds of IP, the landing of the company's new products in the future will continue the high growth trend and continuously thicken the company's performance.
Give a "buy" rating. Considering that the company's strategy of focusing on the game home page and consolidating the three business systems of R & D, distribution and investment + IP has been verified in the performance of 2021, and there are abundant new products and IP reserves in the future, we expect the company's revenue to be RMB 2.181/2.684/3.128 billion and the net profit attributable to the parent company to be RMB 611/6.90/845 million in 2021-23 respectively, The PE corresponding to the closing price on January 25 is 18 / 16 / 13 times respectively, giving a "buy" rating.
Risk warning: the risk that the performance of new products is less than expected; Risk of change of actual controller; Industry policy and regulatory risks.
