Description of the event
Zhongqingbao announced the 2013 three-quarter report. The first three quarters achieved operating income of 180 million yuan and net profit attributable to shareholders of the parent company of 2727.9 yuan, up 41.72% and 107.16% respectively; of these, the third quarter showed revenue of 65.95 million yuan and net profit attributable to shareholders of the parent company of 9.766 million yuan, up 36.25% and 268.59% respectively over the previous year.
At the same time, the company issued an announcement and signed a strategic cooperation agreement with Zhaochi Co., Ltd.. The method of cooperation is for China Qingbao to incorporate game products with all intellectual property rights of its own into smart terminal products produced by Zhaochi Co., Ltd. At the same time, the company can also provide customized game services to users of smart terminal products produced by Zhaochi Co., Ltd., and the two parties share the benefits obtained from joint promotion.
Incident comments
The performance was in line with previous forecasts and achieved rapid growth. The company predicted in the early stages that net profit attributable to shareholders of the parent company would increase 100%-130% year-on-year, and actual performance falling within this range was in line with expectations. The rapid recovery in the company's performance mainly comes from two aspects: on the one hand, the revenue situation of the company's traditional mobile games and page games has grown steadily; on the other hand, the company has strengthened operation management and strictly adopted a “refined product operation model” to improve the efficiency of investment in R&D and marketing expenses. Sales expenses and management expenses in the first three quarters fell to 31% and 23%, respectively, from 49% and 28% in the same period last year.
The inflection point of this year's business improvement is clear. Profits in the first three quarters all achieved relatively rapid growth quarter by quarter, and the Q3 growth rate reached another level: Q1, Q2, and Q3 revenue increased by 41%, 47%, and 36% respectively, while the growth rates of net profit attributable to shareholders of the parent company reached 111%, 57%, and 269% respectively, indicating that the company's performance achieved relatively rapid growth this year after a low point last year, and the inflection point was clear.
After the company adjusts its strategy, it focuses on developing mobile games on the basis of maintaining the stability of mobile games and page games, and its performance is expected to usher in greater explosive elasticity. The mobile game business line includes First Game Interactive, a newly established mobile game business strategy subsidiary of the parent company; the merger and acquisition of Meifeng Digital, which specializes in heavy games; and Sumo Technology, which specializes in light games. It has a rich layout in various subject types such as fairy tales, magic, sports games, cards, etc., and once the flow achieves good performance, it will bring greater performance flexibility.
Cooperation with Zhaochi Co., Ltd. shows the company's development ideas for multi-dimensional terminal layouts such as televisions. In the context of the increasingly rapid development of Internet TV, the company's move shows strong forward-looking nature and is expected to increase the monetization value of high-quality content.
Give the company a “Recommended” rating. The inflection point of improving the company's performance is clear, and the idea of using the capital platform for endogeny and extension is beginning to become clear. EPS is expected to be 0.2, 0.57, 0.9 yuan from 2013 to 2015, while the combined EPS for exam preparation is expected to reach 0.3, 0.65, and 0.95 yuan, giving a “recommended” rating.
