Events:
On April 30, the company released its 2019 annual report. In 2019, the company's operating income reached 1.092 billion yuan, down 42.45% from the same period last year; the net profit belonging to shareholders of listed companies reached 135 million yuan, down 59.87% from the same period last year. In the first quarter of 2020, the company's operating income reached 335 million yuan, an increase of 50.78 percent over the same period last year; the net profit belonging to shareholders of listed companies reached 28 million yuan, an increase of 4.12 percent over the same period last year.
The delay in product launch and other reasons led to the decline in performance in 2019.
The company's performance declined greatly in 2019, which is mainly due to the following reasons: 1) the launch schedule of the company's holding subsidiary DoKemeng self-developed game products and agent game products has been delayed, and the company's large-scale one-time investment income in 2018 (disposal of industrial M & A fund and investment share in the external transfer letter) led to a high base profit in 2018. 2) the company will launch more key products in 2019 than in the fourth quarter, and its performance will mainly be released in the following year.
The number of new games online has increased, and the company has increased its investment in research and development and marketing.
Benefiting from the "home economy" at the beginning of 2020 and the launch of dokemeng new products at the end of 2019, the company's revenue increased significantly in the first quarter of 2020. The operating cost increased by 36.28% year-on-year with the revenue scale, which was less than the revenue scale increase. In addition, with the development of the game business, the sales cost has increased by 119.91%, mainly due to the promotion and use of games. The financial expenses are caused by the increase in the scale of the company's loan and the corresponding increase in interest on the loan. Due to the large increase in the cost side, the growth rate on the profit side is diluted.
The field of 3D printing goes hand in hand to protect the company's future performance.
The company continues to promote the original electrical equipment business. At the same time, the company deepened its research and development of industrial manufacturing robots, and actively participated in the financing of D-round of Xjet, a well-known international 3D printing company, to become the preferred manufacturer of parts and raw materials for Xjet 3D printers.
Be optimistic about the strong R & D capability of the company and the liquidity ability of the top IP database, and maintain the "recommended" rating.
We believe that the company's 2020 product line is mainly RPG games that are highly recognized by the market, and several new games released at the end of 2019 are expected to contribute to the performance in 2020. In addition, the company carried out a share buyback of 148 million yuan in 2019, demonstrating the company's confidence in future performance. It is estimated that the company's net profit from 2020 to 2022 will be 278 million yuan, 412 million yuan and 552 million yuan respectively, an increase of 105.7% and 48.4% respectively over the same period last year. The corresponding EPS is 0.35 yuan and 0.51 yuan respectively. The current stock price is 0.69 times higher than that of 21-14-11 from 2020 to 2022, and the "recommended" rating is maintained.
Risk tips: game regulatory risk, market competition risk, new product quality is not as good as expected risk.