Revenue grew steadily in 2023, and the 24Q1 performance growth rate was impressive. The company achieved revenue of 13.285 billion yuan in 2023, an increase of 15.77% over the previous year, of which overseas revenue was 6.1 billion yuan, accounting for 46%, achieved operating profit of 994 million yuan, and realized net profit of 524 million yuan. 24Q1 achieved revenue of 4.262 billion yuan, a year-on-year increase of 40.99%, achieved net profit of 652 million yuan, a year-on-year increase of 50.32%, and realized net profit of 646 million yuan without return to mother, an increase of 91.66% over the previous year. The company's revenue and profit growth rate in the first quarter was impressive.
It obtained an exclusive license from the “Legends” series in mainland China, and Diandian Interactive climbed to the top of the overseas revenue list. The company's domestic game base is stable. On August 9, 2023, the company issued an announcement stating that its holding subsidiary Atox has reached a new cooperation agreement with Legendary IP Co., Ltd., a subsidiary of Entertainment Virtue. The agreement shows that based on this exclusive cooperation with the other party that shares the copyright holder of the “Legend” series games, Atox will obtain full exclusive rights for the “Legends” series games for 5 years in mainland China. We believe that reaching an agreement will help Altos unify the “Legend” game market, further unlock the commercial value of legendary IP, bring more business opportunities and competitive advantages to Century Huatong, and bring continuous momentum to the company's game business's subsequent performance. In terms of overseas distribution of games, the company's Diandian Interactive performed well. According to data.ai data quoted from Century Huatong's official WeChat account, Diandian Interactive topped the Chinese manufacturer's overseas revenue rankings in February with new products such as “Whiteout Survival,” and is expected to contribute considerable revenue and performance growth to the company in 2024.
The layout provides comprehensive computing power services, and there is plenty of room for new business growth. In 2023, with the advent of the wave of artificial intelligence innovation, the company upgraded the “Cloud Data Division” to the “Artificial Intelligence Cloud Data Division”. The company's artificial intelligence cloud data business continues to deepen business cooperation with Tencent Cloud and HUAWEI CLOUD. At the same time, it has established a computing power joint venture with Litong Electronics. The company will expand the traditional single-cabinet hosting service to a “comprehensive computing power service” industry chain model, and transform from IDC to AI+IDC to enhance the business stickiness of Internet platform customers and create higher value for customers. We believe that the new business layout will open up more room for the company to grow.
Profit forecasting and valuation analysis. We expect the company's 2024-2026 EPS to be 0.35, 0.41, and 0.49 yuan/share, respectively. We believe that the company's classic game performance is stable, and new game reserves are abundant. Referring to comparable companies, we gave the company 17 times PE in 2024, corresponding to a target price of 5.95 yuan/share, maintaining a “superior to the market” rating.
Risk warning: New game launches fall short of expectations, and industry competition heightens risks.