Events:

The company publishes three quarterly reports for 2023.

Comments:

Profits increased rapidly in the first three quarters, and cost control achieved remarkable results.

In the first three quarters of 2023, the company realized operating income of 3.571 billion yuan, an increase of 26.94% over the same period last year, and a net profit of 558 million yuan, an increase of 90.81% over the same period last year. The non-return net profit was 523 million yuan, an increase of 86.33% over the same period last year. In the first three quarters, the company's sales / management / R & D expenses were 2.20 yuan / 1.88 / 177 million yuan respectively, and the sales / management / R & D expense rates were 6.16% / 5.26% / 4.95% respectively, with year-on-year changes of-8.90pct/-0.65pct/-2.12pct. The rate of sales expenses decreased significantly, mainly due to the company's optimized investment strategy. Implement targeted delivery strategies. 2023Q3 achieved an operating income of 1.225 billion yuan in a single quarter, an increase of 33.90% over the same period last year, a net profit of 150 million yuan, an increase of 47.56% over the same period last year, and a non-return net profit of 127 million yuan, a year-on-year increase of 28.36%. Mainly for the early launch of the game business gradually entered the profit recovery period.

Multi-business coordinated development, fine operation results are outstanding

The company realizes the multi-business layout and multi-business coordination. The company's "Yaoji" playing cards have strong brand influence and stable customer base, stable business operation, broadening sales channels online and offline, benefiting from rising unit prices and increasing profits compared with the same period last year. The game plate business adheres to the mode of "focusing on high-quality products, integration of research and transportation", the early launch effect appears, the profit end achieves rapid growth, and the company optimizes the promotion strategy. the establishment of data-based, user behavior-oriented fine marketing and operation system has achieved remarkable results. In the digital marketing section, the company sets up a professional team to create high-quality advertising, builds a privatized intelligent advertising platform, and deeply docks with the huge engine Marketing API to achieve technology-driven human efficiency and full-chain enabling marketing.

Investment advice and profit Forecast

The company's diversified business layout, game business product cycle improvement, poker business basic stability, digital marketing business pro-cyclical recovery, star card and Baokemeng card and other directions to contribute new points. We estimate that the return net profit of the company from 2023 to 2025 will be 707, 877, 000, 100, 000, 100, 000, 100, 000, 100, 000, 100, 000, 100, 000, 100, 000 and 20. 25, respectively, we estimate that the company's homing net profit from 2023 to 2025 will be 707, 877, 1045 million yuan, corresponding to 1.74, 4, 16 and 2.57 shares, respectively, and the corresponding PE will be 13, 11 and 9x, respectively, maintaining the "overweight" rating.

Risk hint

Head of the rapid decline of old games, new games online less than expected, industry policy risks.