重点产品流水下滑，下滑幅度较上半年边际收窄? 1）受版本运营活动节奏影响，Q3《问道》手游流水环比回落；《一念逍遥（大陆版）》Q3在投放增加等因素带动下流水环比小幅增长。Q3《问道》端游流水2.25 亿（同比-11.4%/上半年同比+16.3%），《问道手游》流水4.57 亿（同比-12.6%/上半年同比-14.7%），《一念逍遥（大陆版）》流水1.68 亿（同比-18.4%/上半年同比-54.8%）；2）Q3 新游上线较少叠加老游戏流水下滑和版本更新节奏，致营收同环比均有所下降。截至2024.9.30 公司尚未摊销的充值及道具余额共4.74 亿元，较2024.6.30 的5.16 亿元有所下滑。Description of the event
Due to the decline in the flow of key products, the company achieved revenue of 0.859 billion yuan in 24Q3 (-10.36% YoY/-16.83% YoY), achieved net profit of 0.14 billion yuan (-23.82/month-on-month -47.19%), and realized deduction of non-net profit of 0.151 billion yuan (-15.33% YoY/-43.01% month-on-month). It is planned to pay 10 yuan of 20 yuan (tax included) for the third quarter. The total amount of cash payments is expected to be 0.144 billion yuan, accounting for 103% of net profit. The dividend rate for the first three quarters is about 3.0% based on the closing price of October 25. The decline in core product sales was marginally narrower than in the first half of the year, and there are plenty of new game reserves. Focus on the subsequent flow trends of core products and the pace of new product testing and launch.
Incident comments
The flow of key products declined, and the decline was marginally narrower than in the first half of the year? 1) Affected by the pace of version operation activities, Q3 “Ask” mobile game traffic declined month-on-month; factors such as an increase in sales of “Easy Thinking (Mainland Edition)” led to a slight month-on-month increase in downstream traffic. Q3 “Enquiry” mobile game sales volume was 0.225 billion (-11.4% /year over year in the first half of the year +16.3%), “Enquiry Mobile Game” sales volume 0.457 billion (YoY -12.6% /year over year in the first half of the year -14.7%), and “Happy Thinking (Mainland Edition)” had 0.168 billion (YoY -18.4% /YoY -54.8% YoY in the first half of the year); 2) Fewer new games were launched in Q3, compounding the decline in revenue from year to month. As of 2024.9.30, the company's unamortized deposit and item balance totaled $0.474 billion, down from $0.516 billion on 2024.6.30.
Exchange losses and investment business have partially dragged down performance, and R&D personnel are still growing? 1) There were few new products launched in 24Q3, but “Happy Thinking (Mainland Edition)” increased the number of purchases, with sales expenses +1.7% month-on-month/-3.3% month-on-month to 0.248 billion, and sales expenses increased slightly due to declining revenue; 2) New product development continued to advance. As of 9.30, the company's employees increased by 41 to 1504 over 24 years, and R&D personnel and overseas operators all increased year-on-year, driving Q3 R&D expenses +5.7% year-on-year; 3) Due to exchange rate changes and other factors, Q3 financial expenses increased approximately 5.7% compared to Q2 0.054 billion; changes in investment income and fair value in Q3 had an impact on performance, and asset impairment losses also slightly dragged down performance.
The dividend ratio for the third quarter reached 103%. Focus on the subsequent turnover trends of core products and the pace of new product testing and launch? 1) It is planned to pay 10 yuan (tax included) for the third quarter. The total amount of cash disbursements is expected to be 0.144 billion yuan, accounting for the net profit ratio of 103%, and the dividend rate for the first three quarters is about 3.0% based on the closing price on October 25; the total cash dividends and repurchase amounts for the first three quarters of 2024 account for 78.9% of net profit attributable to mother; 2) It is expected that existing products will continue to release performance under long-term operation and cost optimization; in terms of product reserves, the focus is on the new game “Ask Sword Changsheng (code code M72)” and “The Legend of Zhan Jian M (code number M)” 88)” from August to September The first paid test was carried out during this period. The plan is to launch 2025H1. The proxy product “Echo of Echo” will be approved for public testing on November 13. In addition, there are also self-developed Western Fiction-themed games such as “M11” and “Hundreds of Millions of Light Years”.
Profit forecast and investment advice: We expect the company's net profit to be 0.88 billion/1.04 billion in 2024/2025, respectively, corresponding to 17.5/14.7 times PE, maintaining the buying rating.
Risk warning
1. Risk that product version approval, launch progress and flow performance fall short of expectations; 2. Industry regulatory risks.
