Incident Overview
On June 16, Chuangmeng Tiandi's self-developed two-dimensional TPS game “Carapicciu” officially opened the “Superstring” PC download test. Players who have obtained the test can log in to the game, gather and enter the world of Cachu, and experience the true charm of the “two-dimensional TPS shootout” in battle.
Analysis and judgment
Insist on independent development of boutique games, and self-developed games drive new growth. “Carapiccio” is a two-dimensional hero shooter tactical competition game. It has a two-dimensional style of painting and true two-dimensional “paper man” gameplay, which is very rare in hardcore shooter games. On March 22, 2023, “Carapicciu” received both mobile and PC versions; as of June 19, 2023, the number of reservations for the game on the Bilibili platform had reached 728,000, the TapTap rating was as high as 8.9, and the number of reservations and followers reached 460,000 and 450,000 respectively. The “Carapiccio” “Superstring” PC file deletion test was open for one month. It was another attempt by the company on self-developed games following “Honor All Stars.” We believe that “Cala Picchu” has excellent feedback results during the warm-up period and has the potential to become a leading game, which is expected to create a high level of performance flexibility for the company.
The company has remarkable business collaboration capabilities and is building a game pan-industry chain layout around Fanbook. Self-developed and agency games are expected to use Fanbook to achieve growth exceeding expectations.
(1) In terms of agency games: The company's game sales in 2022 mainly came from the agency games “Subway Parkour,” “Dream Garden,” “Dream Home,” and “Temple Run”, which are operated on a long-term basis
etc., it is expected that it will continue to contribute stable cash flow. Among them, the old game “Subway Parkour” used Fanbook's fan circle operation and player-to-player content creation to quickly break the circle. In 2022, the “Subway Parkour” iOS download list topped the list for 33 consecutive days; the average number of daily active users during the 2023 Spring Festival exceeded 20 million, with more than 100 million monthly active users; social interactions exceeded 870 million times in January 2023, and the total number of battles exceeded 1.25 billion. According to Qimai's data, as of June 19, 2023, “Subway Parkour” ranked 16th and 2nd in the iOS free game list and the free adventure game list. We think this shows Fanbook's strong social fission ability.
(2) Self-developed new tours: The company will soon launch “Carapicciu” and “Ni no Koku: Interlaced World” in 2023, and the game business is highly flexible. Among them, “Carapiccio” began the “Bose 1.0” test on January 11, 2023. During the testing period, while focusing on players' operation experience, the game also had a depth of operation and strategy, so it received a good reputation on all platforms. The national uniform for “Ni no Kuni: The Interlaced World” began full-platform reservations on March 28. According to SensorTower statistics, the overseas version surpassed 100 million US dollars after 11 days of launch.
(3) In terms of AI: The company cooperates with Microsoft to help various fields such as game product development and Fanbook AI ecosystem construction through the large model capabilities of Microsoft Azure and Open AI. On February 20, 2023, the company announced that it had become Baidu Wenxin Yiyan's first batch of ecological partners, applying the results of intelligent dialogue technology to boutique game experiences and closed loop operations in the Fanbook community, giving priority to receiving support from leading AI technology, marking the first landing of conversational language model technology in the gaming field and large-scale community user management scenarios in China.
Investment advice
The company's agency games contribute stable cash flow. At the same time, self-developed games are expected to open up performance space, and has Fanbook, an operating platform with a scarce private fan circle, which has strong performance certainty and platform scarcity. We expect the company to achieve net profit of 210 million yuan (yoy +108.1%), 317 million yuan (yoy +58.0%), and 401 million yuan (yoy +26.4%) in 2023-2025, respectively. The corresponding EPS is 0.14 yuan, 0.22 yuan, and 0.28 yuan respectively. The current stock price corresponds to the valuation of 21 times, 13 times, and 10 times to maintain the “buy” rating.
Risk warning
There are risks of tightening industry regulations, increased risk of industry competition, risk of version number issuance falling short of expectations, risk of turnover falling short of expectations, and risk of new business expansion falling short of expectations.