Company events:
Developed by the company and intermodal with Bilibili, the heavenly QQ mobile game "the reliever" will be launched online on October 22, 2020. As of 10:00 on October 25, 2020, the game has more than 210000 installations on the Top 6 Magi TapTap platform on the IOS Game list, gaining high attention in the second-dimensional gamer community.
Event comments:
Differentiated play and netizens' secondary creation of copywriting Terrier accelerates the breakage of the game. We think that the reasons why "the Solver" has attracted great attention in the market include: 1) the strong product power of the game itself: mainly reflected in the deep "world outlook", the combat experience of the coexistence of "crisp" and "strategy", gorgeous and pleasing painting style, and reasonable payment mode. 2) it is different from the games of the same category: the game is innovative in play and screen perspective, and can compete differently with the existing ARPG-like two-dimensional games; 3) "copywriting Terrier" helps the game to speed up the break of the circle: the copywriting problem of the game in the third test has been created as a "copywriting Terrier" by many players for the second time, making the "mind reliever".
Get far more exposure than you can imagine, and further help the game break the circle.
The full-platform launch of "Demonizer" marks the beginning of a new product cycle for the company. We believe that 2019 will be the first year of the company's transition from PC games to mobile games, and with the full-platform launch of "Paradise" in October 2020, the company's blockbuster product cycle will also come. My Chivalrous, which launched in November, is an open-world, retro martial arts strategy RPG mobile game, run by the company's co-founder and well-known game producer Yu Xiaoliang, and has signed a contract for Aurora Mobile Limited to be an exclusive agent by Tencent. The main products in 2021 include: MOBA mobile game "DC: the Top Battlefield", which is developed by DC's major superhero licensing companies; independent game "Yuan Neng out of Control", which changes hands with high reputation; and "Barbarian Battle II", which inherits the excellent standards of its predecessors and is expected to transform high word-of-mouth to high returns.
Investment advice:
We reiterate our previous view that the company's short-term logic lies in the product line this year and next, and the medium-and long-term logic lies in the company's excellent R & D strength and deep-rooted innovation genes. In terms of product line, the launch of the whole platform of "Solver" marks the beginning of a new round of product cycle, followed by Tencent's only generation of "my Chivalrous" will be launched in November; and in 2021, the company's main products include DC authorized MOBA mobile game "DC: peak Battlefield" and "Barbarian Battle 2". A number of blockbuster mobile games are expected to drive further rapid growth. In terms of medium-and long-term driving forces, under the trend that the mobile game industry will continue to maintain rapid growth in the future, while the value of developers is further highlighted, the company is expected to rely on its own excellent R & D strength and innovative genes. continue to create differentiated high-quality mobile games works, so as to promote sustained growth in future performance.
We estimate that the company's operating income from 2020 to 2022 will be 1.447 billion yuan, an increase of 50.2%, 40.9% and 22.2% respectively over the same period last year. The net profit of the company will be 40.1%, 5.62% and 694 million respectively, an increase of 75.7%, 40.2% and 23.6%, respectively. The EPS is 1.64 and 2.30, respectively, and the corresponding PE is 24.3X/17.3X/14.0X. Maintain a "buy" rating.
Risk Tips:
1) the risk of a slowdown in the growth of the mobile game industry
2) the risk that cloud games do not develop as expected.
3) the risk that the company's new online games are not as expected by the market.
