Main points of investment:
Enter the master do can dream, create the second track of growth. The company's traditional electrical business is to provide professional distribution network equipment and comprehensive solutions, and the core advantage is to have the production technology of new polymer electrical insulation materials. at the same time, in order to enhance the profitability of listed companies, the company actively carries out investment business and tries to improve the layout of the industrial chain. in 2017, it completed the acquisition of Doc Dream, and entered the high value-added Internet entertainment field. For the company to create a future performance growth of the second track. In 2018, dokemeng continued a good growth momentum, with operating income of 991 million yuan in the first half of the year, an increase of 332.48% over the same period last year, and net profit of 164 million yuan, an increase of 115.14% over the same period last year.
The company will continue to expand around the Internet integrated services industry chain, and the future performance growth momentum will come from the following points: (1) invest in and cultivate R & D teams to enhance the company's game research and development strength; (2) with the help of the company's industrial M & A fund, mergers and acquisitions of the same type and strategic targets, expand the scale of purchase, so as to reduce costs. (3) cultivate its own traffic entrance and combine it with the existing game business to realize the integration of flow and cash.
The electrical business is moving towards intelligence, and the distribution robot opens up a new space for growth. In terms of traditional electrical business, the company is also actively carrying out the intelligent transformation of its products, including carrying functions such as remote monitoring and testing on traditional products to achieve intelligent detection of high voltage equipment and lines in remote suburbs and mountainous areas. enhance the added value of products and customer stickiness. At the same time, the company has also obtained the only manufacturing right of the unmanned distribution robot, and invested 15 million yuan to obtain a 15% stake in real machine intelligence, which has the ability of independent research and development and design of the unmanned distribution robot. The distribution robot can solve the logistics distribution problem of the last kilometer in the industrial park or urban community. The layout of the company in these two aspects is expected to benefit from the future construction of intelligent cities and the popularization of intelligent manufacturing.
The game version number restarts the examination and approval, which is good for the healthy development of the industry. Over the past decade, China's game market has experienced extremely rapid growth, with sales revenue growing from 18.6 billion yuan in 2008 to 203.6 billion yuan in 2017, with an annual compound growth rate of 30.46%. With the increasing popularity of domestic smartphones, the mobile game market has become the main driving force for the growth of the game industry since 2013. its sales revenue reached 116.12 billion yuan in 2017, accounting for more than 50% of the overall game market. The version number restriction policy of March 2018 halted the rapid development of China's game industry, but it is not easy for DoKemeng to hand over a satisfactory answer paper. With the news of the resumption of approval of the game version number on December 21, it is a boost to the follow-up development of the industry. In a more healthy and favorable development environment, dokemeng is expected to continue its growth momentum.
In addition, in the domestic online game approval information released on December 29, 2018, the subsidiary Dookemeng won the game version numbers of "Ancient Jian Feixian" and "King of the whole people", which will not only contribute to the performance of the company. it is also a recognition of the quality of the games developed by the company.
Profit forecast and investment rating: cover for the first time and give an overweight rating. At present, the company has formed a two-round performance-driven pattern of "high-end intelligent manufacturing + Internet integrated services". In terms of traditional business, the company is actively transforming to the R & D and production of intelligent products. in the future, it is expected to benefit from the construction of smart cities and the popularization of intelligent manufacturing to achieve sustained and stable growth of performance. at the same time, the newly placed entertainment business is also expected to improve the overall environment of the industry. It has become another strong supporting point for the company's performance. based on the above analysis, we expect the company's net profit from 2018 to 2020 to be 418 million, 510 million and 582 million yuan respectively, and the current stock price corresponds to 19.41,15.92,13.95 times of PE. The main reason for the company's performance to turn losses into profits in 2018 is the combination of doomable tables, which is based on the principle of prudence, covering for the first time and giving an overweight rating.
Risk tips: 1) the impact of unexpected events such as the slowdown in the growth rate of the domestic game industry and similar version number restrictions; 2) the progress of smart city construction and the popularization of intelligent manufacturing is not as expected.