Introduction to this report:
Benefiting from winter vacation and Spring Festival consumption, 2024Q1 achieved net profit of 1998 million yuan, a year-on-year increase of 247.5%. The performance exceeded expectations. In the future, offline operations are expected to continue to improve, and more IP derivatives are expected to contribute considerable profits.
Key points of investment:
The 24Q1 performance exceeded expectations and maintained the “Overweight” rating. In view of the continuous promotion of new animation IP derivatives and increased profitability, we adjusted the EPS forecast value for 24/25 to 0.68/1.00 yuan (previous value was 0.68/0.9 yuan) and added a 26-year EPS forecast value of 1.15 yuan. Given that the company has strong IP resources and channel advantages in the field of animation IP cards, and the net profit CAGR is expected to reach 48% in 24-26, we believe that the company should enjoy a premium over comparable companies. We will give 40X PE in 2025, raise the target price to 27.27 yuan, and maintain” “Gain” rating.
Incident: The company released financial reports for 2023 and 2024Q1. The full year of 2023 achieved revenue of 816 million yuan, a year-on-year increase of 35%, and realized net profit of 51.96 million yuan, an increase of 173% over the previous year; 2024Q1 achieved revenue of 215 million yuan, an increase of 37.6% over the previous year, and realized net profit of 1998 million yuan, an increase of 247.5% over the previous year, and the 2024Q1 performance exceeded expectations.
Anime IP derivatives have maintained a high growth rate, the core IP is stable, and self-developed IPs are heavily launched. In addition to the leading IP for “Pokémon”, the company actively launched a new IP, installed the “Naruto World of Cards” card machine in September 2023, and launched the first self-developed IP card machine “Three Kingdoms” at the end of 2023. Revenue from anime IP derivatives reached 259 million yuan in 2023, up 75.6% year on year, gross margin reached 41.2%, up 5.1 pct year on year; 2024Q1's revenue reached 74 million yuan, up 63.7% year on year, and gross margin further increased to 43.8%.
Game and amusement equipment sales are strong, and offline operations are being steadily restored. Game and amusement equipment sales revenue reached 398 million yuan in 2023, up 27.3% year on year. 2024Q1's business revenue reached 73.94 million yuan, up 63.7% year on year. In 2023, the total revenue from offline operations (playground operation+equipment cooperative operation) reached 149 million yuan, up 13.7% year on year, 2024Q1 revenue reached 32.39 million yuan, a slight decrease of 1.1% year on year, and overall offline operations showed a steady recovery trend.
Risk warning: risk of losing major customers, risk of bad accounts receivable.