Events:
The company's operating income in the first three quarters of 2023 was 2.267 billion yuan, an increase of 44.18 percent over the same period last year, and its net profit was 1.085 billion yuan, an increase of 39.87 percent over the same period last year. Of this total, 23Q3's operating income was 824 million yuan, an increase of 61.96% over the same period last year, and its net profit was 421 million yuan, an increase of 52.36% over the same period last year.
The steady flow of the "original journey" has promoted the 23Q3 performance growth company 23Q3 performance to maintain a high growth rate. Main departments: 1) New Tour performance continues to release: since the company's core product "original Journey" was launched in March 23, it has accumulated more than 1 billion yuan and continued to contribute income. According to Qimai data, the "original journey" in 23Q3 basically maintained in the domestic iOS best-selling list of about 30, running water maintained a steady level. 2) the cost side is well controlled: the ratio of 23Q3 operating cost / sales expense / administrative expense / R & D expense to operating income is 10.4% / 27.7% / 4.3% / 22.2%, respectively, which is-6.5/8.5/-4.4/-6.5pct compared with the same period last year. Among them, the sales expense rate increased 8.5pct compared with the same period last year, mainly due to the company's continuous marketing investment in the new game during the reporting period.
The new tour is rich in reserves, paying attention to the "original journey" multi-version contribution incremental company's rich reserves of new games. Among them, 1) the "journey" line: "the original journey" is expected to launch an "official version", which mainly focuses on the optimization and expansion of the content in such aspects as polishing the core play, promoting short-term retention, strengthening the social system, etc., and cooperate with a new round of buying promotion after launch, it is expected to prolong the life cycle of the game. In addition, the company has a Mini Game version of "the original Journey", which is expected to benefit from the channel dividend, as well as the H5 game "King's Journey", which will be launched after the smooth operation of "the original Journey". 2) leisure competition line: the DAU of "Space Action" exceeded 2.5 million after the first round of promotion in the summer, and changed its name to "Space Kill" at the end of September, which is expected to achieve moderate growth with the gradual stability of the community; 3) innovative categories: the company also has a reserve of "No Throne" (Western Fiction theme MMO) and a globalization-oriented SLG product. Looking forward to 23Q4 and 24 years, the company is expected to achieve breakthroughs in IP sequels and innovative categories and contribute to incremental performance based on the steady performance of the old games of the "journey" line and leisure competition line.
Earnings forecast, valuation and rating
We estimate that the company's operating income from 2023 to 2025 will be 30.3 RMB 0.79 billion yuan respectively, with a year-on-year growth rate of 49%, 25%, 15%, 1.44%, 1.55 billion, and 45%, respectively, respectively, with a year-on-year growth rate of 45%, 25%, 15%, 0.62, 0.77, 0.89 and 28.44 per share, respectively. We believe that the company is expected to benefit from its own IP product matrix and the performance increment brought about by category expansion in the long term, giving the company 20 times PE in 2024 with a target price of 15.49 yuan and maintaining a "buy" rating.
Risk tips: version number policy, the company's game launch progress, after the launch of the water is less than the expected risk.