Events:
The company announced that after early online testing and acceptance by Chongqing Welfare Lottery Distribution Center, the "Happy very" video lottery game developed by the company was officially listed in more than 190 welfare lottery self-service stores (including Zhongfu online stores) and welfare lottery theme bars in Chongqing on April 18, 2018.
"Happy very" is settled in Chongqing to realize the transformation from development to income. "Happy very" is a new quick lottery game issued by the China Welfare Lottery Distribution and Management Center. The company is responsible for the upgrading and transformation of the underlying game, and online operation. According to the agreement, the company will charge 3/1000 of the total game sales as a development service fee. The successful launch of Chongqing Video Lottery will make a good start for the company to further promote this operation model and gain revenue in other regions.
Video color has great potential for development.
Video lottery is a key product released by the company last year to adapt to the current lottery development situation. Video lottery is an iterative upgrade of high-frequency lottery, such as welfare lottery, sports lottery, etc., with more innovation in the form of expression, which can be sold in different clients online and offline. Compared with the traditional lottery, it is more in line with the habits and needs of young consumers. In 2017, the sales volume of the lottery industry exceeded 420 billion yuan, of which the video lottery increased a lot.
As the post-80s and post-90s consumers become the main body of the lottery, the space of video color will be opened.
Lay out the whole industry chain of lottery and build the leading service provider of lottery.
With the strengthening of the supervision of the Internet lottery by the state, the company is the only company left in the A-share market that still sticks to the lottery industry. The company has laid out lottery game product development, lottery printing, as well as store operation and other links. At this stage, lottery revenue is still concentrated in mid-stream printing; in game development, the company has stored more than 200 games and has lottery-related products in different categories, such as electronic lottery database, mobile game lottery, video lottery and so on; in terms of store operation, the company is actively exploring the smart store model.
In the future, the company expects to have stable income in the upper, middle and lower reaches of the lottery.
Profit forecast and investment suggestion
Video color is in the early stage of promotion, we do not consider the revenue impact of this business on the company for the time being. We estimate that from 2018 to 2020, the company's operating income will be 7.00\ 7.18\ 746 million yuan, the net profit will be 0.17\ 0.18\ 21 million yuan, and the EPS will be 0.03\ 0.04\ 0.04 yuan, corresponding to the closing price PE of 368x\ 351x\ 309x on April 18. Maintain the "overweight" rating.
Risk hint
Raw material prices rise, gross profit margin decline; video color promotion is not as expected; policy risk.
