Events:
On February 3, 2020, the company issued a 2019 performance forecast: the net profit attributed to the parent company is expected to range from-2.395 billion yuan to-2.4 billion yuan in 2019, compared with 840 million yuan in the same period last year. During the reporting period, the loss in the company's performance was mainly due to the expected impairment of goodwill and other assets. The impact of non-recurrent profit and loss on net profit in 2019 is expected to be 57 million yuan. The impairment of the company is mainly aimed at the goodwill impairment test of related assets, including Hangzhou Zhe Xin, and intends to make some goodwill impairment, so as to further shrink the business, focusing on the relevant pan-entertainment business with Tom Cat as the core IP.
Comments:
The performance loss is mainly the impairment of goodwill, and after the release of the risk, the company focused on IP business, the main system of goodwill impairment, Hangzhou Zhe Xin, which is responsible for integrating the long-tail flow channel for the distribution of stand-alone leisure game products. Considering that with the completion of the company's acquisition of Outfit 7, "talking Tom Cat" has become the main IP of the company, and the Hangzhou Zhixin distribution business is affected by the stricter examination and approval of the version number and the lack of content of the upstream company, the company decided to write down the goodwill of Hangzhou Zhixin. In addition, the company's traditional chemical business has been fully transferred in 2019, and its 2020 performance will not include related business. Company risk release release valuation suppression to welcome 2020, while the company's casual games also ushered in new changes in video advertising.
Focus on "Tom cat family IP", the company developed into a game-based, IP diversified pan-entertainment to realize a new era according to the announcement, after the completion of the impairment of goodwill, the company will focus on the "talking Tom Cat" as the core ecological operation and development of IP, strengthen the online promotion of mobile applications, animation, film and television, offline layout of IP derivatives and licensing business, theme parks and other chain formats. According to App Annie, "my Tom Cat 2" is the seventh most downloaded game in the world in 2019. The "talking Tom Cat Family" series App has been downloaded more than 10 billion times worldwide, with more than 370 million MAU, making it one of the top IP in the field of mobile games. We believe that the company's casual games are expected to have high growth with the extension of the 2020 holiday, and that the company's games are expected to develop to a moderate level and continue to improve the ARPU of users. We are optimistic about the advantages of the company's leisure game track and the rich and diversified ways of cashing out the company's high-quality IP and market space.
Adjust and set out again, be optimistic about the development of copyright business and audio and video business, and maintain the "highly recommended" rating. We estimate that the company's net profit from 2019 to 2021 will be-23.99 shock 9.45 billion yuan, respectively, and the corresponding EPS will be-0.68 shock 0.27 shock 0.33 yuan. It is optimistic that after the release of the company's risk, the performance and valuation of leisure games will be improved, and the company's continuous cash flow ability of boutique IP operations will be maintained and the "recommended" rating will be maintained.
Risk tips: the version number is limited, the game business is not as expected, and the progress of the company's IP diversification is slow.
