Main points of the report:
Deep ploughing leisure games category, long-term stable operation of core products
The company's Seikei technology deep ploughing fishing, chess and cards and other leisure games, the main products "fingertip fishing", "fishing explosion" operation for many years, the product performance is stable. Big Fish Sports focuses on overseas, focusing on Bingo games, mainly operating products such as "Bingo Party" and "Bingo Sapes". By the beginning of 2023, overseas game products have been released to more than 100 countries and regions around the world, with a total registered users of more than 35 million. The company reserves new leisure game products, which are expected to be launched one after another, with long-term operation as the goal, optimize the stability of the company matrix, and further consolidate the advantages of leisure game track, which is expected to drive follow-up performance growth.
Poker business can expand production and improve efficiency, and digital marketing business can be repaired in a cyclical manner.
The company has been engaged in the poker industry for many years and has sold 1.037 billion sets of playing cards in 2022, and the gross profit margin has been stable at more than 20% in recent years. It is planned to build an industrial base in Chuzhou with an annual output of 600 million units.
With the increase in production capacity, the company plans to increase its market share in China's inland provinces and actively expand overseas markets. At the same time, in line with consumers' pursuit of high quality of playing cards, the average unit price of new products is raised, which promotes the rise of volume and price. Digital marketing business has declined in the past 22 years under the influence of the macro environment. Luming Technology, a subsidiary of Luming Technology, with byte jump information flow advertising marketing as the core, has rich experience and extensive media resources. This year, the business recovery cycle is expected to start gradually as the macro-economy recovers.
Layout of star cards and Bao Ke Meng cards, contributing new highlights
In 2022, the company strategically invested in Shanghai Chaowang Company, which consists of card issuer DAKA and card trading platform Catao CardHobby, formally laying out the star card business. DAKA has signed and issued products covering football (Chinese Super League, five major European leagues), basketball (CBA), e-sports (LOL) and so on. The secondary trading volume of the platform is growing rapidly. In addition, the participating company Yao Ji Chaopin won the classic IP derivative game Baokemengka card agent, a wide audience, strong social attributes of play, continue to expand the offline layout and contribute new highlights.
Investment advice and profit Forecast
The company has diversified business layout, improved product cycle of game business, strong certainty of 23-year performance repair, basic stability of poker business, pro-cyclical recovery of digital marketing business, star cards and Baokemeng cards and other directions to contribute new highlights. We estimate that the 23-25 net profit of the company will be 707, 877, 10.45 million yuan, corresponding to EPS 1.74, 2.16, 2.57 shares, and PE, 15, 12, 10x, with an overweight rating for the first time.
Risk hint
Head of the rapid decline of old games, new games online less than expected, industry policy risks.