Event: Xinghui Entertainment released its third quarterly report on October 22, 2003, with operating income of 1.466 billion yuan in the first three quarters, an increase of 12.77% over the same period last year, and net profit of 57.2722 million yuan, up 216.28% over the same period last year.
Comments:
The revenue of Xinghui Entertainment 23Q3 in a single quarter was 751 million yuan, an increase of 43.67% over the same period last year, with a net profit of 134 million yuan, compared with a net loss of 35.6191 million yuan in the same period last year. This was mainly due to the company's sports business reducing player costs and optimizing the cost structure. In addition, the game business also contributed some increments. The sales expenses of Q3 company in 23 years were 86.0762 million yuan, up 159.49% from the same period last year, and the sales expense rate was 11.46%, year-on-year + 5.12pct, mainly due to the increase in the company's game business promotion investment during the reporting period; the management expenses were 64.8804 million yuan, up 1.83% from the same period last year, and the management expense rate was 8.64%, year-on-year-3.55pct The R & D expenditure was 8.4302 million yuan, down 1.26% from the same period last year, and the R & D expenditure rate was 1.12%, year-on-year-0.51pct.
Game business: the company adjusts the game business strategy, SLG category and heavyweight IP products contribute to the performance increment. Tencent exclusive agent of the three Kingdoms SLG products "Battlefield without Borders" in August, the first week on the iOS free list to maintain the top 10, strategy game bestseller list ranked eighth, the first month water broke 100 million. "Adventure Island" IP launched in three Southeast Asian countries in July 2023 and won the iOS free list Singapore Malaysia Top1 hegemony list 10 days, as well as Thailand and Malaysia game bestseller list Top2 results, outstanding performance, the mainland is expected to launch in 24 years. The follow-up blockbuster products are rich in reserves: for example, the Battle of the Sky is expected to be launched in the second half of 2024, and the Legend of Wonderland is expected to be launched from 2024 to early 2025.
The football business continues to optimize its cost structure, contributing an important profit increase to the third quarter. The company reduces the cost of players quarter by quarter, entering the 23Compact 24 new season in the third quarter, and the club implements the reduced salary policy for all first-team players and coaching teams. at the same time, during the transfer window of the football league from July to August, the club adjusted the team by means of loan and transfer, and the transfer, sale and addition of players brought a net income of more than 100 million yuan for the club. The adjusted cost operation will continue until the arrival of the winter window.
The fundamentals of the toy business remain stable. The company continues to cooperate with FAW Audi, BMW and other 4S stores, and actively develops a number of large indoor chain amusement parks, including big players, interstellar legends and so on. In terms of F1, the company Q3 launched the Alfa Romeo F1Team ORLEN C42 building block car and Red Bull F1 remote control car. In the fourth quarter, the company will gradually promote the R & D and listing of new toy products such as 1:10 Hummer, 1:14 Ferrari 499p remote control car and 1:14 Audi RS Q e-tron E2 building car.
Investment advice: the company's game business heavyweight product reserve is sufficient, the online rhythm is clear, the football business loss is obviously narrowed. We believe that 23 years of company focus on the accumulation of resources, profits are expected to form an anchor, 24-year profits are expected to be further released. According to the consensus forecast of Wind on October 23, 2023, the company's net profit for 23-25 is 0.73 million yuan, an increase of 124%, 175%, 46%, corresponding to 56X/20X/14X, respectively. It is recommended to pay attention to.
Risk factors: industry competition aggravates risk, game performance falls short of expectations, exchange rate fluctuation risk