Glacier Network is the main online game enterprise integrating research and transportation in China. The main business is a large-scale multiplayer online game developed based on self-developed engine technology. It mainly adopts independent operation, supplemented by joint operation or authorized operation with domestic and foreign operators, and there are dozens of cooperative operators. The company and its products have won more than 20 industry honors or awards, mainly client-side online games, and covering mobile games, web games and other game types. At present, a number of products have been officially put into operation or are in the testing stage. The company's current game products are mainly client-side online games "Expedition OL" and "Longwu".
The growth of online games at the PC end has stabilized, while the mobile end has maintained rapid growth. According to data released by the Game work Committee, the sales revenue of China's game market in 2015 was 140.7 billion yuan, an increase of 22.9 percent over the same period last year. PC end game market: the scale and market pattern tend to stabilize, and the growth rate slows down. According to CNG data, the growth of client games has gradually stagnated in recent years. The market size of page games is 21.95 billion in 2015, and the growth rate is expected to slow down gradually in the future. Mobile game market: sales of 2016H reached 37.48 billion yuan, a year-on-year growth rate of 79%. Revenue accounted for more than 50% of the total game market, continuing to maintain rapid growth.
Glacier Network main boutique client games, the follow-up will actively develop page games, mobile games market. At the beginning of its establishment, the company focused on the development and operation of client-side online games. The independent R & D and operation of "Expedition OL" and "Longwu" contributed a total income of 360 million yuan in 2015, accounting for 98% of the company's total revenue. Since 2013, the gross profit margin has been higher than 90%, exceeding the industry average. Glacier Network not only tamps the market of boutique client games, but also actively develops the market of page games and mobile games. at present, the company is developing a total of 5 client-side online games, 3 mobile games and 1 web game, including "undefeated Legend", "Warhammer" and "Ghost Valley unparalleled" three PC games in the test phase, which are expected to be launched in 2016 and 2017.
The concentration of equity is conducive to the implementation of decision-making and capital operation. The company publicly issued 25 million shares at a price of 37.02 yuan per share, and the total amount of funds raised was 925.5 million yuan. After deducting the issuance expenses, the net amount of funds raised was 860 million yuan. After the completion of the issue, the proportion of shares held by Liu Heguo, the actual controller, is 43.8%, which is more concentrated, which is conducive to the rapid implementation of decision-making.
Profit forecast and valuation: we expect the revenue of the glacier online game business from 2016 to 2018 to be 387 million yuan, 426 million yuan and 512 million yuan, up 4.6%, 10.1% and 20.3% from the same period last year. The net profits attributed to the parent company were 195 million yuan, 225 million yuan and 270 million yuan respectively, up 13.88%, 15.41% and 19.79% respectively over the same period last year. The corresponding EPS is 1.95,2.25,2.70 yuan respectively. As new shares, the company enjoys a partial valuation premium, with a smaller market capitalization and greater flexibility. Coverage for the first time, no rating, recommended attention.
Risk tips: 1) the overall decline risk of the client game industry; 2) the brain drain risk; 3) the new game research and development progress is not up to the expected risk.