Core views:
The company released a quarterly report, with 24Q1 revenue of 4.750 billion yuan, yoy +26.17% /qoq +5.47%; sales expenses of 2,891 billion yuan, sales expenses of 60.87%, yoy+9.93pct/qoq+0.25pct; management expenses of 188 million yuan, management expenses of 3.97%; R&D expenses of 175 million yuan, R&D expenses of 3.69%. Net profit to mother was 616 million yuan, yoy -20.45% /qoq +32.15%, and net profit margin to mother was 12.97%. Net profit after deducting non-return to mother was 616 million yuan, and net profit margin after deducting non-return to mother was 12.97%. In terms of costs and expenses, the Q1 gross margin was 81.72%, up 1.41 pct from month to month, and 3.48 pct. The absolute value of Q1 sales expenses and sales expenses ratio did not change much from month to month, but the year-on-year increase was quite obvious.
Dividends were paid as planned for the first quarter, boosting confidence. The company distributed a cash dividend of 2.10 yuan (tax included) for every 10 shares to all shareholders in the first quarter of 2024, for a total of 467 million yuan. The 24Q1 dividend payment rate reached 75.8%, and the dividend rate was 1.2% based on the closing price on April 29.
24Q1 revenue increased significantly over the same period, achieving five consecutive quarters of growth starting in 23Q1. Mainly, the mini-program games “Seek the Thousand,” “Soul Prologue”, and “The Unknown Man” contributed to revenue growth and revenue growth, but the launch of new games brought an increase in sales expenses, causing pressure on the profit side. The net interest rate of the company increased month-on-month, but declined year-on-year. Key products stocked by the company include the self-developed “Codename Battle MMO”, “Time Grocery Store” and “The Son-in-law” (mini-game+app, both terminals).
Profit forecasting and investment advice. Looking ahead to 24 years, the company has verified its mini game development and operation capabilities through various products and has reserved a variety of mini games, so we are optimistic about this year's revenue performance. Minigame purchases and distribution methods may have a negative impact on profit margins, but we are optimistic that the absolute value of profits will remain at a certain level. The company's overseas game flow is relatively stable, and the 24-year profit margin is expected to be further released. We are optimistic that the company will seize segmented circuit dividends to drive performance growth. We expect the company's net profit to reach 28.0/30.1/3 billion yuan in 24-26, an increase of 5.3%/7.5%/7.5%. Referring to comparable companies, we gave the company a 24-year 18 xPE valuation, calculated a reasonable value of 22.72 yuan/share per share, maintaining a “buy” rating.
Risk warning. Version risk, risk of falling short of expectations, and increased risk of industry competition.