Revenue and profits grew steadily, and key products performed well.
In the first half of 2020, the revenue was 926 million yuan (+ 33.0%), the net profit was 443 million yuan (+ 110.1%), and the non-return net profit was 269 million yuan (+ 10.1%). Among them, the revenue in the second quarter was 517 million yuan (+ 51.9%), the net profit was 349 million yuan (+ 1337.9%), and the non-return net profit was 180 million yuan (+ 93.4%). Income growth is mainly due to the excellent performance of overseas new online self-research games, "one punch Superman" Hong Kong, Macao and Taiwan continues to rank at the top of the list, and the fair value of other illiquid financial assets contributes significantly to the increase in net profit.
The product reserve is rich, and the big cycle of new products begins.
In August 2020, the self-developed spontaneous product "True Red Blade" was launched, and its contribution to the company's performance needs to be reflected step by step. The company's future key product reserves include "National Miracle 2" (Tencent Didai / existing version number), "Dark Tide" (existing version number), "Street bully: duel" (Tencent Didai / existing version number), and so on. The new product cycle is open and the contribution to performance is expected.
Employee stock ownership shows long-term confidence and stimulates team vitality.
On August 18, the company disclosed the second phase of the employee stock ownership plan, which originated from the 19-year repurchase of shares, with a total of 27.86 million shares, accounting for 1.01% of the total share capital, with a transfer price of 3.80 yuan per share. There are no more than 122 people in the employee stock ownership plan, of which Liu Huicheng, chairman and general manager, accounts for 36.75% of the employee stock ownership plan.
Risk hint: new product launch delay risk; new product pipeline performance is not as expected.
Investment advice: new product cycle begins, maintain "buy" rating from the company level, short-term company new product cycle begins, performance recovery upward channel, ushered in Davis double-click. From the industry level, in the medium and long term, driven by multiple factors such as changes in downstream channels, games out to sea, and new technologies (cloud games, etc.), the game industry is expected to maintain a high boom. As a high-quality developer, the growth of new products is expected to be gradually highlighted in the improvement of corporate governance and the introduction of new products. To maintain its previous profit forecast, we estimate that the net return profit for 20-22 years is 8.61 million, respectively, and the corresponding EPS is 0.31, 0.43 and 0.54 yuan, respectively, and the corresponding share price PE is 29.2, 21.1 and 16.9X, respectively, which has a greater valuation advantage compared with similar companies. We continue to value the company's excellent R & D capability and sustainable growth in the new product cycle, and continue to maintain the "buy" rating.