Events:
The company announced that it is expected to achieve a net profit of 8-950 million yuan in the first half of 2023, an increase of 65% Mel 96% over the same period last year; deducting a non-homed net profit of RMB7.2-870 million, an increase of 67% w w 102% over the same period last year; the profit performance is relatively outstanding.
Main points of investment:
The ability of interactive self-research has been improved. According to wind, after nearly four years of incubation and precipitation, the overseas revenue of self-developed games has accounted for more than 70%, and has maintained double-digit growth in recent years. Dots Interactive has its own IP "FamilyFarm" series of new works, "FamilyFarm Adventure (Feifei Great Adventure)", which has performed well overseas. In 2022, Valor Legends: Eternity, a mobile game with cards placed by DianDian Interactive, also became a phenomenal product. In addition, the strong growth of two new games, "Frozen City" (Ice Age) and "Whiteout Survival" (Frost Apocalypse), developed by ourselves. According to the global revenue ranking of Chinese mobile game publishers released by Sensor Tower in June 2023, Diantian Interactive ranked seventh, continuing to improve from last month.
The company's domestic game business is expected to recover in 23 years. The company has rich IP reserves, including "Legend of Blood", "Valley of the Dragon", "Legend World", "Rainbow Island", "Hero Age", "Wind and Cloud", "God without Moon", "Light Warrior" and so on. The product has a long life cycle, high user stickiness, and can contribute income to the company continuously and steadily. The company has a rich product matrix, including not only IP masterpieces such as "Dragon Valley International Edition", "Famine: new Home" and "Legend of Cologne", but also "Project Code: 7", "Project Code: ritual", "Project Code: AW3", "Disco Match" and other innovative products, among which "Famine: new Home"
The external test has been started.
Pay attention to the progress of cloud data business. The company deepens its business layout and transforms strategically from IDC to AI+IDC. According to the strategic cooperation agreement signed between Century Longteng, a subsidiary of wind,1), and Litong Electronics, a joint venture company of AI Computing Services Project was established. 2) Century Longteng plans to increase the transaction amount of goods and services provided to the related party Tencent Technology (Chengdu) Co., Ltd., which is expected to increase by no more than RMB 1.1 billion in 2023.
With the improvement of ownership structure, the related rights and interests of Legend IP are clear. According to the announcement of wind,1), 400 million shares of Century Huatong held by Shanghai Yaoyuru Internet Technology Partnership were sold at the JD.com judicial auction platform, with a total price of about 2.868 billion yuan.
Jiaxing Xukai Enterprise Management Partnership (Limited Partnership), Guohua Life Insurance Co., Ltd., Wang Jie, Jiangxi greedy play Information Technology Co., Ltd., and Zheshang Securities Co., Ltd. each sold 80 million shares. 2) "legendary World" as a well-known national online game IP, the final judgment of the recent case clearly determined that Sheng interesting Information has the right to adapt the PC game of "legendary World" on its own or authorized by others.
Investment analysis opinion: we maintain the company's 23-25 return net profit forecast of 1.730 USD 2.274 billion RMB 2.847 billion, and the current price corresponding to 23-25 PE is respectively times that of 29-22-18. Taking into account the gradual recovery of the company's game business and cloud data business is expected to become the second curve of development, maintain the "overweight" rating.
Risk tips: goodwill impairment risk; game project postponement / game new product performance below-expected risk; the company received a regulatory letter from the Shenzhen Stock Exchange for share buybacks; the company announced on May 29 the reply to the inquiry letter on the 2022 annual report. Please pay attention to it.