Events:
The company announced its semi-annual results on the evening of August 23, 2016: in the first half of 2016, the company achieved operating income of 112.2356 million yuan, an increase of 16.60% over the same period last year; operating profit of 50.5252 million yuan, an increase of 11.11% over the same period last year; net profit of common shareholders belonging to listed companies was 49.3609 million yuan, an increase of 19.98% over the same period last year. The reason for the growth in performance is mainly due to the operating income of the game's own platform, and the company has changed its previous strategy of promoting many games at the same time, concentrating resources, focusing on promoting a few boutique games such as "Xianyu", "the Wild Land", "the Legend of the thorn Shadow", "Young Records of the three Kingdoms", "Wanjie Dragon Slayer" and so on, achieving a substantial increase in game operating income.
Conclusion:
1, the company mainly engaged in mobile games, mainly engaged in mobile game development, sales and game operation business, the main products and services are: mobile stand-alone games, cross-platform games and game operation. The company first began to engage in the production and sales of mobile phone hardware. with the saturation of the hardware market and the decline in performance, the company adjusted its development direction in time, transferred to the direction of mobile games, and achieved rapid development with the help of mobile game companies. According to the company's public data, in 2013, 2014 and 2015, the company's operating income was 199 million yuan, 206 million yuan and 204 million yuan respectively, and its net profit was 76 million yuan, 88 million yuan and 92 million yuan respectively. After 2015, the company has been completely transformed into a mobile game research and development and operation manufacturer, hardware equipment is no longer one of the company's main business.
2, rooted in the mobile game industry, development + operation of a line, all the company's product development and operation is mainly around mobile games. As of 2015, the company has developed 947 mobile games; 7 cross-platform game products, of which 5 have been put into operation and 2 are in the development stage; of the two game operation platforms, 17188 mobile games platform is mainly the operation of web games 2388 is responsible for the operation of mobile games, each with a clear division of labor. The company is deeply engaged in mobile games, has a stable customer source and player base, coupled with the vigorous development of the mobile game market, the company is bound to continue to "blossom and bear fruit" in this field. According to the 2016 Mobile Game Industry Research report released by iResearch Consulting, the market size of online games will exceed 180 billion yuan in 2016, of which mobile games will account for nearly half, and the market size is expected to reach 91.2 billion yuan, which is expected to exceed the market size of PC games and page games combined.
3. Key mobile games are about to be launched, and the company is involved in Internet performing arts business. in the second half of the year, the company will launch self-research page games "White-haired Witch", self-research mobile games "Star Journey" and "God will record". In addition to self-research games, the company will also continue to introduce boutique games through single-generation or joint operation, increase investment in operation and promotion, and further improve the income scale and profitability of game operations. The company plans to further increase personnel and capital investment in Internet performing arts, and strive to build Internet performing arts business into a new profit growth point.
Earnings Forecast and valuation: we give the company 1.71, 2.23, 2.89, and the current price of the corresponding company is PE, 86-66-51, with a "buy" rating.
Risk hint: the growth rate of the mobile game industry is declining, and the company's transformation is not up to expectations.
