Maintain the "overweight" rating. The performance is in line with expectations, and after the negative impact of Apple Inc's IDFA policy, the company's Q3 performance is back on track. Maintain 2021-2023 EPS to 2.97 pounds 4.24 pounds 5.37 yuan, maintain the target price to 59.4 yuan, maintain the "overweight" rating.
What happened: the company released its three-quarter report in 2021, the company's 2021Q3 operating income increased by 42.32% to 444 million yuan compared with the same period last year, the net profit of returning to the mother decreased by 0.62% to 114 million yuan, and the net profit of non-returning mother increased by 59.01% to 113.8 million yuan over the same period last year. The company's 2021Q1-Q3 made a profit of 1.373 billion yuan, an increase of 65.76% over the same period last year, and its net profit was 314 million yuan, an increase of 96.58% over the same period last year.
The demand of Internet advertising marketing is further expanded, and the company is faced with development opportunities. The rise and concurrence of some advertising alliances in 2021 have provided better value empowerment for advertisers, and significant dividends have been realized outside short video platforms, further driving advertisers such as games, information tools, novel reading and other advertisers to expand Internet advertising marketing demand, providing a developmental opportunity for the rapid growth of the company's performance, and the company has achieved phased results in content realization.
There is still room for the growth of the second ring traffic, and the company has a strong ability to industrialize leisure games. The market size of the second ring traffic is expected to grow from 30 billion in 2020 to 150 billion in 2023. Leisure games are expected to occupy the main market in the future. The company's data enabling business and the production industrialization of leisure games are expected. At the same time, the company subsidiary and Kuaishou Technology subsidiary set up "Little Orange" to build the content ecology of leisure games and achieve closed-loop business.
Risk hint: the expansion of Internet advertising is not as expected, and the development and operation of new products is not as expected.