Events:
On the evening of January 15, 2021, Playtika, which is indirectly owned by the company, was listed on NASDAQ under the symbol "PLTK".
Comments:
Playtika is data-driven and is expected to collaborate with the company. Playtika is good at merger and acquisition integration and artificial intelligence technology, business model for the acquisition of game assets for transformation, through big data, artificial intelligence and other technical means of continuous analysis, understanding and learning of users, and then output the game's fine operation transformation plan to achieve growth. Playtika's current game product matrix includes 15 games, including "Slotomania", "Bingo Blitz", "House of Fun", "CaesarsSlots" and "World Series of Poker". According to App Annie, nine of them are among the best-selling Top100 in the United States (a combination of iOS App Store and Google Play Store), and seven of the nine are acquired by post-acquisition transformation. According to the prospectus, the quarterly revenue of "Bingo Blitz", "Solitaire Grand Harvest" and "June's Journey" acquired by Playtika increased by 410%, 146% and 148% respectively. This can be seen from the product transformation / enhancement capabilities and data-driven capabilities of Playtika. Listed companies are expected to have business coordination with Playtika, on the one hand, to improve the data performance of their products with the technical strength of Playtika, and on the other hand, to further open the overseas mobile game market by using Playtika's overseas marketing network.
Playtika releases investment income and is expected to thicken the company's performance in the long run. The company disclosed on July 3, 2020 that Juyi Network (49% owned by the company) has completed the acquisition of Chongqing Gift through capital increase, and Juyi Network has a 100% interest in Chongqing Cibi. Chongqing Cibi holds 9672 Class A common shares of Alpha (42.04% of the total share capital of Alpha), and the company indirectly holds Playtika20.58%. The company uses the equity method to calculate the income of Juyi network as a long-term equity investment; therefore, part of the Playtika equity income held by the company indirectly thickens the company's performance through investment income. Playtika realized operating income of US $1.798 billion in the first three quarters of 2020, an increase of 28.48% over the same period last year, and an adjusted EBITDA profit of US $666 million, an increase of 41.18% over the same period last year. After this IPO, Playtika will continue to increase R & D investment, attract elite talents to join, expand the global layout, and continue to promote long-term development. In the future, Playtika game business is expected to maintain a high growth rate and continue to contribute stable investment income for listed companies.
Investment suggestion: as the top game manufacturer in the PC game era, the company has its own game business to focus on the key track and invest core resources to maintain steady development. At the same time, the company's indirect acquisition of leisure social game leader Playtika is expected to produce long-term performance thickening and business coordination. We estimate that the company's net profit from 2020 to 2022 will be 1.1 billion yuan, 1.46 billion yuan and 1.78 billion yuan respectively, corresponding to 0.54,0.72 yuan and 0.88 yuan EPS respectively, maintaining the "buy-A" rating.
Risk tips: long-term equity investment projects are uncontrollable, the progress of new product research and development is not as expected, the promotion effect of overseas markets is not as expected, the commercial progress of 5G cloud games is lower than expected, and the industry regulatory policy changes.