Key points of investment
The company focuses on the game business and is deeply involved in the classic IP “Dream Three Kingdoms”. The company has the classic IP “Dream Three Kingdoms” and has maintained its leading position in the industry for ten years since it was launched. In the context of being selected for the Asian Games e-sports project, the company is committed to competitive tournaments and localized practices, which is expected to set off another boom. The company has always insisted on focusing on the main game business, combining endogenous R&D with external investment, and strives to create new brilliance by acquiring and building high-quality IP.
The game industry has huge space, and the transition from mobile games to mobile games has become a breaking point. The size of the Chinese game market ranks first in the world, and the game industry has maintained a relatively rapid growth rate. At the same time, with the full popularization of smartphones, the mobile game market rapidly emerged and occupied a major position, and major game manufacturers “changed hands” one after another. This strategy became a breaking point in the game industry. The company began switching from mobile games to mobile games in 2015. “Dream Three Kingdoms”, “Dream Tower Defense”, etc. have all launched mobile games, and are vigorously developing new mobile game products. Currently, the share of mobile game revenue has surpassed that of mobile games, driving the company back to the growth channel.
Excellent team matrix, perfect R&D system. The company has sufficient talent reserves, a matrix of excellent R&D teams, and many star game producers leading the way. In the future, it will continue to increase its game research and development efforts to create more high-quality games where quality and temperature coexist.
Work from multiple angles and develop in all directions. Under the guidance of the company's core business strategy, from R&D and operation to investment in related industries, in addition to independent research and development, epitaxial mergers and acquisitions are also expected to create new growth points. The company's online products have been widely recognized and have outstanding performance. In-hand reserve games will also be launched at a pace one after another, with deep accumulation and positive prospects.
Profit forecast: Based on the above judgment, we expect the company's net profit to be 393/451/508 million yuan for 2021-2023. The PE corresponding to the current stock price (December 17, 2021) is 19.0/16.6/14.7 times respectively. This is covered for the first time, giving a “prudent increase in holdings” rating.
Risk warning: Market competition intensifies, product life cycle, self-research projects do not meet expectations, risk of failure of outbound investment projects.