Main points of investment:
Event: on the evening of July 26, Northern Latitude released its 2017 half-yearly results KuaiBao. During the reporting period, the company achieved revenue of 291 million, an increase of 108.65% over the same period last year, and a net profit of 77.65 million, an increase of 243.73% over the same period last year.
The semi-annual report results are in line with expectations, and the transformation of mobile Internet is accelerated. During the reporting period, the company achieved a revenue of 291 million yuan and a net profit of 77.65 million yuan, an increase of 243.73% over the same period last year. This growth rate was consistent with the 209% year-on-year increase of 204% in the previous half of the year, and was partial to the forecast upper limit. Business income and profitability have increased significantly. Since 2016, the company has focused on channel and industrial advantages, stripped of high-input R & D projects and optimized personnel structure, the operation is improving in an all-round way. The net profit in the second quarter of 2017 was 49 million yuan, compared with the previous maximum profit of 32 million yuan in the fourth quarter of 2016, the profitability has been greatly improved, and the increase in profits is expected to accelerate.
Focus on boutique game agents, profits gradually released. The company actively focuses on the distribution of overseas boutique game agents and intensive ploughing channels. Considering that there is a certain overlap between the shareholding subsidiary Hangzhou Palm League and the company's existing business, the company has completed the sale of 21.68% of the shares in Hangzhou Palm League in the first half of the year, cashing in the investment income and optimizing the asset structure, which is in line with the layout of the company's coordinated development. In addition, in the first quarter, the company cooperated with EA Game Company to release "simulated City: I am the Mayor", which has performed well so far, and profits are expected to be released gradually in the second half of the year.
The operation of Nanjing Industrial Park is smooth and the profit space is gradually opened. In 2010, the company invested in the construction of a mobile Internet industry base in Nanjing, which was completed and accepted at the end of December 2015, with a total construction volume of 113,000 square meters. According to the current comparable commercial real estate price of 25000 per square meter, the value of this part can reach 2.8 billion yuan, and there is huge room for asset revaluation. At present, the occupancy rate of the industrial park is as high as 80%, and the occupancy rate is still gradually increasing. According to the current rental estimate, when the occupancy rate reaches 100%, it will steadily contribute 3000 to 40 million of the net profit each year, and the profit contribution is expected to increase gradually.
Maintain a "buy" rating. Taking into account the overall improvement and growth of the company's business, we estimate that the company's EPS in 2017-2019 will be 0.28,0.41,0.52 respectively. At present, the company's main business focuses on the distribution of overseas boutique game agents, and the growth momentum of the mid-year report in 17 years remains strong; virtual operators take the lead in making profits, and mobile Internet aviation business has made a great breakthrough, especially the early layout of Internet lottery business. greatly increase the upward flexibility of future performance. As a result, it will be given 50 times PE in 2017, with a six-month target price of 14 yuan, maintaining a "buy" rating.
Risk hint: new business development is lower than expected, systematic valuation risk.