Main points of investment
Event: Dilong Culture issued a forecast for the first quarter of 2018. It is estimated that Q1 will achieve a net profit of 163 million yuan to 202 million yuan in 2018, an increase of 105% over the same period last year.
Mobile games continue to make efforts, and online mobile games enter the harvest period. In 2018, the company's Q1 mobile stand-alone game and mobile online game business increased significantly compared with the same period last year.
As the leader of A-share single-machine mobile games, the company has steadily increased its market share in single-machine mobile games, and single-machine mobile games has become an important cash cow business of the company. Since 2015, we have arranged the operation of online mobile games, and jointly operated a number of online mobile games, such as "fighting through the Sky", "Legend of the White-haired Witch" and so on.
In 2017, the company started the road of sole generation, and online games gradually entered the harvest period. In September, the 3D air combat mobile game "Bath Blood Sky" was launched, which was recommended by Apple Inc store for half a month. It was one of the top 10 GooglePlay bestsellers in many countries and was well received by taptap users. The AR 3D action card mobile game "dimensional Summoner", which uses an innovative AR+ABS experience, was launched on ios in February 2018 and on Android at the end of March, showing a steady increase, and future performance is to be expected.
Mobile games are rich in reserves and have strong sustainable profitability. In terms of stand-alone mobile games, the company expects to launch 7 self-developed games and more than 160 proxy games every year from 2018 to 2020; in terms of online mobile games, we expect the company to launch more than 5 online games every year; at the same time, the company also has a layout in H5 games.
The advertising business is developing rapidly. In the process of issuing and operating games, the company has accumulated resources such as customers, channels and advertising platforms, enriched the experience of promotion and marketing, and on this basis, constantly expand the advertising agency business.
The company's advertising business has developed rapidly in the past two years and is expected to become the second largest business after the game.
IP as the core, the pan-entertainment strategy is actively promoted. The company with IP as the core, actively layout games, film and television, variety, animation and other pan-entertainment industry chain.
The company has accumulated rich experience in adapting IP mobile games, such as "Happy Baby forward" and "the Ultimate showdown of Pig Man" in animation IP, and "Shining Dad" and "24 hours" in film and television variety IP.
Sun Gong Simolong Pictures has made continuous efforts in the film and television side, jointly investing in the TV series "Tiankeng Falcon Hunt" with Guangming Pictures, which is adapted from the novel of the same name, with Gao Mingqian as the chief producer, Ren Quan as the co-producer, and famous director Cheng Zhichao as the director. Wang Junkai and other actors.
With the change of the board of directors, the new chairman promises profits, and the new management has rich experience in the entertainment industry. The board of directors of the company held a general election at the end of 2018. Yu Haifeng, former chairman and general manager of Meisheng yuan, was elected as the new chairman of the listed company, promising that the company's net return profit from 2017 to 2020 would not be less than 700 million yuan, 850 million yuan and 950 million yuan. At the same time, the board of directors hired Bo Bin, deputy general manager of Meisheng Yuan, as the general manager of the listed company. The new management has rich experience and resources in the cultural and entertainment industry, and the company will be more competitive in the pan-entertainment industry in the future.
The extension layout is accelerated, and the acquisition of Mi fun to enhance the company's game R & D and distribution strength. Meishengyuan, a subsidiary of Dilong Culture, acquired Shenzhen Mitchell Technology Co., Ltd. for 236.8 million yuan in February 2018. The original shareholders promised that the net profit for 2018-2020 would not be less than 22 million yuan, 27 million yuan and 32 million yuan. This acquisition will further enhance the company's strength in game research and development, distribution and mobile advertising, while thickening the company's performance.
Profit forecast and investment suggestions: we predict that the revenue of Dilong Culture from 2017 to 2019 will be 3.09 billion yuan, 3.825 billion yuan and 4.53 billion yuan respectively, an increase of 87.29%, 23.76% and 18.43% over the same period last year, and the net profit of returning home will be 557 million yuan, 753 million yuan and 927 million yuan respectively, up 47.08%, 35.21% and 23.04% respectively. The corresponding eps is 0.65,0.88 and 1.09 yuan respectively.
Risk tips: 1) the game flow is not up to expectations; 2) the market competition is intensified; 3) the project process is not up to expectations; 5) systemic risk.
