The company turned from loss to profit in the first three quarters of 21

God Entertainment (002354) released its three-quarter report for 2021, during which the company achieved a total operating income of 1.168 billion yuan, an increase of 55.31% over the same period last year, and a net profit of 26.6351 million yuan, an increase of 113.50% over the same period last year, and basic earnings per share was 0.02 yuan.

The performance of data traffic business is excellent, and business optimization continues to advance.

During the reporting period, the company built e-sports game and data flow dual business engine around the development strategy of "e-sports driven games and data flow driven real economy". Build e-sports enabling game operation, brand content marketing and accurate digital marketing multi-dimensional promotion, own traffic platform and mobile application distribution synchronously enhance the product matrix and traffic ecology.

In the first three quarters of 21, the company's operating income increased by 55.31% compared with the same period last year, mainly due to the growth of data flow business income in the current period, and the business trend continued to improve. During the reporting period, the company built a data flow platform relying on massive data resources, realized the coordination of digital effect traffic and brand content traffic, and provided full-scene data flow operation services covering traffic distribution, delivery optimization, creative efficiency improvement and content marketing. Shanxi data flow Ecological Park as the innovation carrier, aggregation of multi-dimensional data and mass content, aggregation of brand merchants, small and medium-sized businesses, content entrepreneurs, MCN institutions, new individual economy and other core elements, mining customer pain points, innovative service system. During the reporting period, the company signed a "maximum counter-guarantee contract" with Hubei Zhongchuang financing guarantee Co., Ltd. the purpose is for Hubei Jinri Toutiao Technology Co., Ltd. and Beijing Kuaishou Technology Advertising Co., Ltd. to provide credit line support to Shanxi Pengjing, a subsidiary of the company, so that Shanxi Pengjing can be paid within a certain amount and within a certain period of time without full advance payment. It can greatly improve the capital use efficiency of Shanxi Pengjing, enhance the scale of the company's digital marketing business in the field of short video, further expand the business scale effect, and enhance the competitiveness of the company's data traffic business.

In addition, the company's business optimization is in progress, and the sale of the subsidiary Fantasy Tour is progressing smoothly during the reporting period. according to the company announcement, as of September, a total of 30 million yuan of equivalent US dollars has been received from the counterparty to the transaction. According to the current progress, the company is expected to recognize 130 million yuan in income in the fourth quarter. The sale of Fantasy Tour by the company will not only help optimize the overall business layout, but also provide sufficient funds and resources for the company's new business development with an estimated income of 130 million yuan from the asset sale.

Profit Forecast and Investment rating

The overall operation of the company has been on the right track. at present, the layout of e-sports games and data traffic has entered a period of sustainable development and release, and the effect of mutual promotion and coordinated development of games and traffic business has gradually emerged. therefore, we expect the overall profitability of the company to continue to improve. To sum up, we give the company an investment rating of "overweight" and keep its profit forecast unchanged, with an estimated EPS of 0.16,0.23 and 0.30 yuan per share in 2021-23, respectively.

Risk hint

The company's business development is not up to expectations, product operations are not up to expectations, game industry policy risks, data flow ecological park policies and operational risks, and so on.