The company released its 2020 mid-year report: 20H1 achieved total revenue of 926 million yuan, an increase of 33.04%; Guimu's net profit was 443 million yuan, an increase of 110.11%, mainly due to other non-current financial assets contributing 217 million yuan of fair value change profit and loss; net profit of Fumo after deduction was 269 million yuan, an increase of 10.08% over the same period. Looking at a single quarter, 20Q2 achieved revenue of 517 million yuan, an increase of 51.93%, an increase of 26.45% over the previous quarter; net profit returned to the mother after deduction was 180 million yuan, an increase of 93.4% over the same period. Q2 The company's revenue and net profit after deduction both showed high growth in a single quarter.
The integration of research and operation has paid off, and overseas revenue has driven growth. No new games have been launched by 20H1. There are 23 products in operation. The revenue mainly comes from “One Punch Man: The Strongest Man”, “King of Fighters 98: Ultimate Battle OL”, and “Miracle: Awakening”. The performance of key games in Q2 was relatively stable, mainly driven by overseas players. Among them, “King of Fighters 98: Ultimate Battle OL” and “Miracle: Awakening” Q2 overseas recharge turnover were 89 million yuan and 122 million yuan, both up from Q1; the number of active users of “One Punch Man: The Strongest Man” Q1/Q2 remained around 5 million.
Subsequent company key products such as “National Miracle 2,” “Tides of Darkness,” and “Street Fighter: Showdown” are progressing steadily. It is expected that “Street Fighter: Showdown” will go live around October if it is sooner, and “Miracle for All 2” will go live in November-December. Earlier, the company revealed the draft second phase of the employee stock ownership plan. The number of participants was quite wide. It is expected that it will continue to stimulate employees' enthusiasm and help the company develop steadily over the long term.
Investment advice: Due to the adjustment of the product launch cycle, we adjusted PalmFun Technology's revenue forecast for 2020-2022 to 22.02, 29.88 and 3.703 billion yuan, while the net profit of the mother was 705, 10.75 and 1,344 million yuan, up 93.8%, 52.6% and 25.0% year-on-year. We believe that corporate governance, products, and assets all continue to improve marginal, and are about to enter a period of intensive product launch; considering the dimensions from this year to next year, the company's product schedule and performance flexibility are prominent in the gaming sector. Referring to comparable company valuations, PalmFun Technology was given 30x PE in 2021, with a reasonable value of 11.70 yuan/share. Maintain a “buy” rating.
Risk warning: version number risk, risk of falling short of expectations, risk of increased industry competition.
