24Q1 performance summary: The company's 24Q1 achieved revenue of 927 million yuan, yoy -18.97% /qoq +5.6%, gross margin of 89.24%, yoy+0.97pct/qoq-0.42pct; generated sales expenses of 294 million yuan, sales expenses of 31.67%, yoy+0.70pct/qoq+5.8pct; R&D expenses were 186 million yuan, R&D expenses of 20.03%, yoy+4.79pct/qoq+5.51pct; management The cost was 93 million yuan, the management fee rate was 10.08%, yoy+2.23pct/qoq+5.36pct. Net profit to the mother was 253 million yuan, yoy -17.35% /qoq -4.68%, and the net profit margin reached 27.32%, yoy+0.54pct/qoq-2.95pct; net profit after deducting non-return to mother was 198 million yuan, yoy -29.54% /qoq -32.86%.
Q1 Revenue rebounded month-on-month, and core product turnover delays increased. Driven by the “Enquiry” Spring Festival campaign and the anniversary celebration of “One Thought”, according to Qimai data, the “Enquiry” mobile game ranked 38 on the Q1 bestseller list, up 4 places from month to month, and the launch of the new games “Immortal Family”, “Shenzhou Thousand Foods”, “Flying Dragon Riders (Overseas)” and “Monster Never Cry (European and American version)” brought an increase. Q1 The company's unamortized balance of recharges and items totaled $529 million, an increase of 88 million yuan over 23Q4, and the deferred balance of core product turnover increased compared to 23Q4.
Profit forecasting and investment advice. The company's core game flow has stabilized. The average ranking of the 24Q1 bestseller list for the “Enquiry” mobile game and the “Easy Thinking” mobile game both increased month-on-month. Combined with the Spring Festival event, the company's revenue improved month-on-month, and the 8th anniversary celebration of “Enquiry” in the second quarter is warming up, which will bring growth in the second quarter. The company has reserves such as SLG's “The Strongest Castle”, “M72,” the magic placement “M72,” the magic placement “Legend of the Sword,” Western Fantasy “M11,” the sci-fi strategy card “One Hundred Million Light Years,” and the Guofeng-themed RPG “Fengshen Fantasy World”. The company is based on a global layout, and the net profit for 24-25 is expected to return to mother. Considering that the company is about to launch a number of self-developed and proxy games, referring to comparable companies, we gave the company a 24-year 18xPE valuation, with a corresponding reasonable value of about 252.54 yuan/share, maintaining a “buy” rating.
Risk warning. The release of game versions fell short of expectations, the turnover fell short of expectations, and competition in the industry intensified.