The three major businesses of games, toys and sports are neck and neck, and the strategic layout is clear. Xinghui Entertainment, formerly known as Guangdong Xinghui car Model Co., Ltd., was listed on the gem of Shenzhen Stock Exchange on January 20, 2010. The company used to be a light industrial enterprise mainly producing toys. In recent years, it has developed two businesses of games and sports, forming a situation of common development of the three major businesses. At present, the game business accounts for half of the company's income structure, and the sports business is developing rapidly, becoming the company's second largest business. The traditional toy business develops steadily, contributing 20% of the company's business income.
Games, toys, sports market development space is broad, the company's business has a bright future. In terms of the game industry, China's export scale has expanded rapidly, opening up a new space for the growth of the domestic game market. In 2018, the overseas market sales revenue of China's independent R & D online games reached 9.59 billion US dollars, an increase of 15.8% over the same period last year. In the toy industry, driven by the three engines of consumption power, the number of audience and consumption willingness, China's toy market has a broad prospect. In terms of the sports industry, benefiting from the success of applying for the Asian Cup and the expansion of the World Cup, China's football industry will enter a golden period of development. It is estimated that the scale of China's football industry will exceed 2 trillion yuan in 2025.
The multi-business of the company is superimposed to play the role of cultural link. The "Wulei effect" caused by the signing of Chinese player Wu Lei with the Royal Spaniard in 2019 has greatly increased the popularity of the club and the team in China, and is expected to bring revenues such as club advertising sponsorship and derivatives, as well as an increase in revenue from commercial development of La Liga. At the same time, Wu Lei has become the global exclusive brand spokesman for Xinghui games and Xinghui toys, whose huge attention and fans will organically integrate the competitive advantages of the company's various businesses, achieve the superposition effect of multiple businesses, and promote the company's high-quality development.
Continue to expand the process of internationalization and strive to build global well-known brands. In terms of channel management, the company has established long-term and stable cooperative relations with toy agents in many countries around the world. In terms of domestic sales in game business, the company is one of the core partners of Tencent Open platform, Jinri Toutiao, hard Core Alliance and other high-quality channels. In terms of export, the company continues to export excellent works. "three Kingdoms M" was widely recognized by players at the beginning of its launch, and once topped the AppStore bestseller list in South Korea. In terms of brand, the company's brand "RASTAR", as a well-known domestic toy brand, is constantly expanding its world influence.
Cover for the first time and give a "recommended" rating. At the industry level, the market space for games, toys and sports industries is large, and each business is expected to benefit from the growth of the industry as a whole. At the company level, the company has outstanding R & D strength and clear business layout, and is expected to achieve stable growth with the help of business structure optimization. The company's equity incentive measures not only effectively stimulate the enthusiasm of employees, but also show the confidence of the company's management in the future development. We estimate that the company's homing net profit from 2019 to 2021 will be RMB 313,000,000 respectively, corresponding to the current market value PE score is 19-16-13 times, according to the comparable company valuation, give the company 2019 target PE 22 times, corresponding to the target price 5.50 yuan, cover for the first time, give a "recommended" rating.
Risk tips: trade war friction intensified; market competition intensified; team record decline.