Perfect World (002624): Bright product flow performance drives high growth of gaming business; good performance of Chinese New Year games drives Q1 performance
Event company released the 2019 annual 成都桑拿网 report performance bulletin, the company initially achieved operating income of 80 in 2019.
370,000 yuan, an increase of 0 in ten years.
05%; net profit attributable to mother 15.
4.0 billion, a decrease of 11 per year.
85%; Realize basic profit income1.
16 yuan, down 10 before.
According to the company’s democratic disclosure of annual report performance forecast (expected net profit in 2019 is 14.
5 ppm), 2019 net profit is in the median of the forecast range, and performance is in line with expectations.
Brief Comment 1. The game business performed well in 2019, and it is worth looking forward to in 2020. According to the disclosure of the company’s performance newsletter, the company’s game business will achieve operating income 68 in 2019.
30,000 yuan, an annual increase of 25.
99%; net profit of 18.
80,000 yuan, an increase of 37 in ten years.
The outstanding performance of the company’s game sector in 2019 is better reflected on the profit side.
In the Air Force performance forecast, the game business’s net profit for 2019 is 18.
2 ppm, the median value of the digital prior notice disclosed in this performance report, in line with market expectations.
It is obvious that the key game products launched in 2019, “Perfect World”, “Four Dreams of Cloud Dreams” and “My Origins”, allow third-party agency distribution and operation. Therefore, the company’s revenue confirmation is based on a certain consistency after players rechargeUndergo verification.
The self-developed games of military companies are mainly confirmed according to the total amount of players’ recharge, and are confirmed as costs through channel division.
If there is no change in the revenue recognition method for key games in 2019, the company’s game business revenue growth rate will be even brighter.
In March 2019, the company launched the “Perfect World” mobile game, which exceeded 1 billion in the first month; May “Cloud Dream Four Seasons Song” was launched; in late July, “The Condor Heroes 2” was launched, and the product has continued to rank among iOS games since its launch.Top 20 Bestsellers; In November, “My Origins” went live, and in December, “Xin Xiao Ao Jiang Hu” went live for nearly 400 million in the first month.
On the whole, the company’s game sector in 2019 has formed a more complete product matrix. The on-line progress and flow of game products have been dazzling.
The company’s reserve games in 2020 include “New Demon Continent”, “Fantasy New Legend”, “God of War”, “Very Heroes” mobile game, “Very Heroes 2” PC + console, “MagicLegends” PC + console, “Torchilight” “Frontiers” PC + console, etc., product types cover MMORPG, turn-based, ARPG, SLG, Roguelike, card and other types, involving future science fiction, two dimensions, ancient mythology, western magic, oriental fairy and many other possibilities.
At present, the “New Swordsman River”, which was launched in December 2019, remains stable in the next month, and will continue to contribute game flow to the company in 2020.
In addition, during the Spring Festival in 2020, it will be affected by the epidemic situation. Online entertainment consumption represented by games and Internet videos is in strong demand.
According to Qimai data, during the Spring Festival, the company’s “Perfect World” and “Xin Xiao Ao Jiang Jiang” performed well on the iOS bestseller list.
It is expected that the company’s 2020Q1 performance will be significantly accelerated.
In 2019, the company also made a breakthrough in the field of e-sports. Based on the two top-level e-sports masterpieces of “DOTA2” and “CS: GO”, it has established a multi-level and three-dimensional game system.
In August 2019, Perfect World assisted Valve to host the “DOTA2” 2019 International Invitational Tournament (Ti9) in Shanghai. This is also the first time that Ti series events have been held in China.
The company’s classic end-game products “Xianxian”, “Perfect World International Edition”, “DOTA2” and “CS: GO” continue to contribute stable income.
We believe that the company’s accumulation in the field of e-sports and end-games is also the basis for the subsequent company’s development in the field of cloud gaming.
2. Accelerating the digestion of inventory in the film and television business in 2020. As a whole, the company’s operating income in 2019 is basically the same as in 2018, mainly due to two reasons: 1) Asset category: The company separated its cinema business in 2018, and will not replace it in August 2018Consolidation scope.
The cinema business achieved operating income in 2018H14.
1.5 billion, the constant has a certain impact on the company’s growth base in 2019.
Without considering the impact of circuit replacement, the company’s initial revenue in 2019 will increase and increase6.
78% to 85.7.7 billion.
2) Business budget: Affected by the overall film and television industry policies in 2019, the company’s film and television business in 2019 achieved revenue of 12%.
100 million, a year-on-year decrease of 42.
Affected by the industry in 2019, the company’s film and television business saw a significant decrease in revenue and the film and television business was interrupted3.
However, the company has dozens of product reserves in episodes, including the highly watched episodes such as “Eye of the Storm” and “Stewed Rock Sugar”.
In addition, there are “Half Life”, “Aspiring Flying”, “The Fire on the Moon”, “The Best You in the World”, “The Mountains”, “New Year After Year”, “Burning”, “Blue Helmets Squad”, “The Red Age of Gao Daxia”, “Seaport” and other drama reserves.
Affected by the epidemic in 2020Q1, multiple crews suspended the filming progress, which may affect the progress of this year’s episodes.
We believe that under special circumstances this year, the company will have a better opportunity to communicate with the platform side and speed up the progress of inventory digestion.
In addition, the company will accrue inventories for film and television business in 20193.
3. The company plans to make provision for impairment of goodwill in 20193.
500 million US dollars, mainly due to the film and television company Tianjin Tongxin Film and Television formed goodwill.
According to the company’s 2019H1 disclosure, the company’s goodwill totals 9.
7.1 billion, of which Tianjin Tongxin film and television goodwill reached 6.
9.8 billion yuan.
After the impairment of goodwill on Tianjin Tongxin Film and Television, the company’s goodwill will further decline.
Tongxin Film and Television will make corresponding performance compensation to the listed company according to the performance compensation agreement.
[Investment suggestion]We believe that the company has cultivated in the game field for many years, and the game research and development ability has formed a high moat.
We are optimistic about the company’s mobile game 武汉桑拿洗浴会所 product reserve in 2020 and its subsequent layout in the field of cloud games.
It is estimated that the company’s attributable net profit will be 23 in 2020.
0 billion yuan, the current market value corresponds to 2020 price-earnings ratio of 28x, continue to recommend.
[Risk warning]The progress of the cloud game industry is expected gradually; the progress of the reserve game product launch or market performance is less than expected; the content supervision of the film and television industry is becoming more stringent, and the sales price or gross profit level of film and television projects is lower than expected