Events:
On September 8, the company said on the investor question and answer platform that "Adventure Island: the will of the Alliance" has won the version number of Chinese mainland and is expected to be launched in the first quarter of 2024.
Comments:
1. Football club business may cause performance pressure, pay attention to the effect of measures to reduce cost and increase efficiency. 2023H1 achieved revenue of 715 million, down 8% from the same period last year; net profit was-77 million yuan, compared with-14 million yuan in the same period last year; and non-return net profit was-81 million yuan, compared with-21 million yuan in the same period last year. From a quarterly point of view, 23Q2 realized income of 394 million yuan, a decrease of 3.52% over the same period last year, an increase of 22.44% over the same period last year; net profit of-36 million yuan, compared with-4 million yuan in the same period last year; and net profit of-373 million yuan, compared with-9 million yuan in the same period last year. Among them, the revenue of football club business is 340 million yuan, and the net profit is-62.1426 million yuan. The company will implement active cost control measures. According to the contract, all first-team players and technicians will initiate the relegation clause, and operating costs may be reduced. At the same time, during the summer transfer period from July 1 to August 31, according to the team structure and the wishes of the players, the club adjusted the players by means of loan and transfer to promote cost control measures. at the same time, there will also be a certain benefit contribution. Judging from the current adjustment from July to August, the cost pressure on the club has been alleviated.
2. The replacement of 23H1 game business leads to a decrease in net profit, and the launch of new games in the second half of the year is expected to repair the performance.
In the first half of 2023, the company's game business achieved a main business income of 164 million yuan, accounting for 22.93% of the total revenue; the net profit was 1.2609 million yuan, a decrease compared with the same period last year, mainly because the company's game business was in the replacement stage of new and old games, the new game products were not yet online, the old products were in the decline stage, and the R & D expenses of the projects under research increased. The company's self-developed SLG product "Battlefield without Borders" was released on August 24, 2023, and is basically in the top 60 on the best-seller list as of September 10. The game was developed by Bawangzhiye and the team in charge of the game, and released by Tencent in the Chinese mainland region. It will also be released overseas and is expected to bring performance repair to the company.
3. A number of games have been obtained, and IP is rich in game resources. 2023H1 has won several game titles such as Adventure Island: the will of the Alliance, Origin and Warriors, Tata Hero and Breaking the Sky: the World of Fire, among which the novel IP's new tour Breaking the Sky: the World of Fire is expected to be released in the second half of 2024.
4. It is estimated that the annual operating income in 23-24-25 will be 1.804 billion yuan, the net profit will be 0.73 billion yuan, and the corresponding PE will be 61.07X/22.21X/15.20X, which will be given the "recommended" rating.
5. Risk tips: the launch time of new games is not as expected, the performance of new games is not as expected, the flow of old games is declining, and the performance of sports business is not up to expectations.