Perfect World (002624): Net profit of games in 2019 YOY + 37% Since the beginning of 2020, a number of mobile games have outstanding performance and are expected to contribute to the increase in the first quarter
Events: 1. The company announced a performance report, with revenue of 80 in 2019.
380,000 yuan (+0 compared to the same period last year).
05%), net profit attributable to mother 15.
04 billion (YOY-11.
85%); Excluding the impact of the demolition of the circuit business in 2018, the revenue was YOY + 6.
2, 2019 game revenue 68.
30,000 yuan (+25 compared with the same period last year).
99%, 3 mobile games authorize Tencent’s sole generation, if it is restored to a higher growth rate, the film and television revenue is 12.
10,000 yuan (YOY-42.
54%); net game profit 18.
80,000 yuan (+37 compared with the same period last year).
41%), film and television defects 3.
10,000 yuan (impairment of inventory by 3.
6ppm, impairment of goodwill 3.
500 million, but also recognized performance compensation).
3. In 2019, if the impairment of goodwill and the impact of compensation are not taken into consideration, the profit of the film and television business with the inventory impairment added will be approximately 0.
500 million; the company’s overall net profit attributable to its parent is about 18.
6.4 billion (YOY + 9%, compared to 17 in 2018.
Comments: 1. The company’s game business has grown rapidly in 2019 (net profit YOY + 37%). Since the beginning of 2020, affected by activities, holidays and epidemic conditions, a number of game products such as “Xin Xiao Ao Jiang Hu” have performed well and are expected to beQuarterly gaming performance brings elasticity.
① The company’s game business realized revenue 68 in 2019.
300 million, a year-on-year increase of +25.
99% (if reduced to a higher growth rate of flowing water); net profit18.
80,000 yuan, a year-on-year increase of +37.
② A number of new mobile games in 2019 performed well, “Perfect World”, “Four Seasons Songs in Cloud Dreams”, “My Origins” 3 were authorized for exclusive distribution by Tencent (recognized by the net income method), and2 “,” New Swordsman “(on-line in December 2019 / deferred revenue to 2020).
Long-period old product “Xianxian Mobile Games” (online in 2016), with stable performance.
The agent games “DOTA2” and “CS: GO” are expected to improve with the help of e-sports events.
③ Since the beginning of 2020, affected by activities, holidays and epidemic conditions, the game industry’s revenue, player size, and usage time have seen considerable growth.
According to Gamma data, domestic mobile game revenue will increase by 49% in January 2020.
5%, an increase of 37 from the previous month.
5% (considering the 19th Spring Festival in February, and excluding the effect of the number of days in February, the growth rate reached 24%).
According to reports, QuestMobile, the total number of daily active users of the entire mobile Internet during the Spring Festival holiday in 2020, the average daily user duration reached a record high, the daily duration of the entire network users from 5 billion hours in early 2020 to 6.1 billion on February 3Hours, with an increase of over 20%; from the perspective of the daily active user increase, mobile games account for 20%, online video 16%, and short video 14%, which are the top three segments; from the average daily usage timeLooking at it, mobile games (159 minutes) have grown by 41% in ten years.
The company’s core products such as “Xiao Xiao Ao Jiang Jiang”, “Perfect World” and “Xianxian Mobile Games” all achieved good performance.
2. In 2019, the film and television business is affected by the industry environment, and some goodwill and inventory are subject to impairment. From the perspective of the company’s drama reserves, in 2020, it will continue to digest inventory and choose new opportunities at the same time.
① From the perspective of the industry structure, supply-side reforms have continued, reductions and upgrades have become mainstream, and heads have focused.
The number of repertoire recorded in 2018-2019 is 1,231 / 905, a decrease of 26%; the number of productions that have completed production and obtained a distribution license in 2018-2019 are 323/254, a decrease of 21%; in 2019, the production of TV seriesThere are 73 license (a type) organizations, compared with 113 in 2017-2018, a decrease of 35%.② In 2019, the company confirmed drama series such as “Youth Fight”, “Building a Dream”, “While We Are Young”, “Old Tavern”, “Mountain Moon”, “Mountain”, “Crocodile and Toothpick Bird”, etc.
At the same time, it is planned to make provision for depreciation of inventories (part of the net realizable value is lower than the book cost) 3.
600 million, plans to goodwill (acquisition of Tongxin Film / Hello Youth Team in 2017 to form goodwill 6.
9.8 billion) provision for impairment 3.
500 million US dollars (recognition of performance compensation income, expected to have no significant impact on the company’s performance after the simultaneous replacement).
③ The company actively adjusted to respond to industry changes and continued to digest inventory.
It is expected that in the first quarter of 2020, there will be confirmations of dramas such as “Stewed Rock Sugar” (fixed), “Eye of the Storm” and other follow-up episodes. Pay attention to the follow-up episode confirmation progress and gross profit margin.
3. Looking ahead, the company has abundant game reserves, including a number of large IP products worth looking forward to.
The Steam China platform and e-sports business are progressing in an orderly manner, and overseas distribution teams are actively integrating global research and transportation resources.
In line with new technological progress, actively deploy cloud games, AR / VR and other applications, and further leverage the company’s experience in heavy / big screen game research and development.
① Reserve of mobile games: “Fantasy New Legend”, “Relic of War”, “Continent of New Gods”, etc., covering MMORPG, turn-based system, ARPG, SLG, Roguelike, card and other types, involving future science fiction, two dimensions, ancient myth, Western magic, Oriental fairy and other alternatives, blending open world, sandbox and other elements.
② End-game reserve: “New World of Immortals” (next generation); console game reserve: “Perfect World Console Edition”; end-game + console dual-platform reserve: “Flame Torch”, “Magic Legend”, “Very Hero 2″Wait.
③ The company has started the cloud game layout since 2016. At present, a number of game products have quickly entered the three major domestic telecommunication operators, Huawei Cloud Computer and other mainstream cloud game platforms. The types of cloud game products planned to be provided are also from mobile games to end users.Swim, console game extension.
At the same time, the company also started cooperation with Google Stadia in cloud game 淡水桑拿网 content and platform technology.
4. Profit forecast and investment grade: We estimate that the company’s net profit attributable to its mother in 2019-2021 will be 15 respectively.
24 ppm, corresponding to the current PE of 44/28 / 25X, maintaining the “recommended” level.
Risk reminders: policy risks in the game and film and television industry, increased competition, lower-than-expected life cycle of old products, lower-than-expected progress in the launch of new products, increased user acquisition costs and IP prices, loss of core talent, changes in player preferences, and changes in new technologiesLess-than-expected, corporate governance / asset impairment / lifting ban and risk reduction, market style switching, etc.