Event
On February 5, the company announced at noon that the "Happy 10" video lottery game developed by the company has been launched recently, and plans to complete the project test acceptance and deployment in March 2018.
Comment
The first A-share listed company to develop lottery games has been approved for testing, and there have been few positive events since the industry was rectified.
"Happy Ten" is a fast-opening lottery game issued by China Welfare Lottery, and the company signed a contract in 2017 to transform its performance. At present, the development and internal testing of the modified version of the video game have been completed, and the public test has been carried out in more than 90 terminals in seven stores, and the public test and acceptance will be completed in March this year. After passing the acceptance test, more than 1400 terminal betting equipment will be fully deployed in more than 190 stores of Chongqing Welfare Lottery, and the company will charge one thousand percent of the development service fee. The upgrade and evaluation of the "Happy 10" game is a rare positive event since the rectification of the lottery industry in 2015, and the company has become the only A-share company that has been approved and tested in the lottery game developed. In view of the fact that "Happy Ten" is a national game issued by Zhongfu Lottery, it is expected that the inter-provincial promotion of new video games in the future will have a certain basis for examination and approval.
Video lottery games have a fast growth rate and a lot of space. Video lottery games are played in a variety of ways, interesting and interactive, and have developed rapidly since they came out. Zhongfu online grew at a compound growth rate of 6.97% from 2014 to 2017 (second only to guessing games that have developed rapidly with sporting events in recent years) and has maintained more than 20% of total welfare lottery sales since 2015. If the company's video lottery games are successfully accepted and promoted nationwide, it may slow down the growth rate of "Zhongfu online" in recent years due to the impact of the "China Lottery online" incident (35.3% compound growth in the first five years of 2015). Create another welfare lottery star.
A share is the purest subject of lottery business, and the lottery game is rich in reserves. The company is the absolute leader of domestic lottery printing business, and it is also the earliest and most complete A-share company with layout of lottery system, game research and development and paperless lottery sales. By 2017, the company has developed and stored nearly 300 original games. In December 2017, the company released a number of mobile games and video games. The company will promote the new lottery strategy on the basis of lottery research and development and application, mainly covering new games, new technologies, new channels and new retail.
Profit forecast and investment suggestion
The company has a complete layout in the lottery industry chain. In view of the testing phase of this video lottery and the termination of the acquisition of palm games, we predict that the company's EPS for 2017-2019 will be 0.05x0.12xpx0.19 yuan (three years CAGR71.9%), corresponding to the PE score of 195-87-54 times, maintaining the "overweight" rating.
Risk
Video lottery game testing or promotion is unfavorable; raw material prices and labor costs rise; lottery system and game research and development, consignment qualification identification and acquisition of uncertainty.
