Main points of investment
Event: in 2020, the company achieved revenue of 2.182 billion yuan, and yoy+29.2%, returned to its mother with a net profit of 504 million yuan. Yoy+21.2%, 's performance was in line with expectations, and the growth was mainly due to the increase in revenue generated by "floating Life for Qing Song". The company announced its intention to pay a dividend of HK12 cents per common share, with a dividend yield of about 4.3%.
Comments: "floating Life for Qing Song" shows the company's leading R & D strength of women in mobile games, and the long-term operation of classic games is stable. At the end of 2019, the company launched self-research 3D open antique style to develop women to mobile games. After the launch of the game, it reached the fifth place on the iOS best-seller list, and the average iOS best-seller list ranked 20th in 20 years. The performance exceeded market expectations to demonstrate the company's leading R & D strength in mobile games while contributing to a steady increase in performance. The excellent performance of game products drives the company's 20-year registered users to 131 million (yoy+21.2%) and monthly ARPPU to 715.5 yuan (yoy+34.6%). Overseas market "floating Life for Qing Song" has been launched in South Korea, up to 15 on the iOS bestseller list, and will be launched one after another in Japan and North America in the future, contributing to the increment of performance. In terms of old games, the company adopts a long life cycle operation strategy, the product performance is stable, the company "Xi Princess Biography" has been in operation for nearly 6 years, the current operation is still stable and updated. The outstanding performance of new and old games has jointly promoted the growth of the company's performance.
Gross profit margin increased slightly, "floating Life for Qing Song" marketing promotion led to an increase in sales costs. In 2020, the gross profit of the company was 1.468 billion yuan (yoy+33.2%) and the gross profit margin was 67.3% (yoy+2.1pct). The sales expense is 612 million yuan (yoy+55.7%), and the sales expense rate is 28.1% (yoy+4.8pct). The increase in sales expense is mainly due to the increase in the online purchase of "floating Life for Qing Song". The company's sales expense rate reached 36.1% in the first half of 20 years, and the game entered a profit recovery period in the second half of the year. R & D cost 265 million yuan (yoy+18.4%), R & D expenditure rate (yoy-1pct). The management fee is 46 million yuan (yoy-25.4%), and the decrease is mainly due to the management fee including listing fee in 2019.
Around the three strategic depth layout of diversification, commercialization IP and globalization, the company has a rich product line.
In terms of diversified categories, the company has a reserve of national style social mobile games "Lingyunuo" and "this life without whiteness" (public test in April), and the company also reserves a modern workplace mobile game "du Lala's promotion". In addition, the company has invested in R & D teams in many places, which will obtain the global agency of team R & D game products and enrich the company's product matrix. In terms of commercial IP, the company has formed three major IP: antique style, modern theme and genie world. Among them, the company plans to build a "floating life five-part" around the floating world, and the second generation product "code name: FS2" after "floating Life is Qing Song".
Under research and development, it is expected to expand the influence of IP. In terms of globalization, the company will rely on good cooperation with giants such as Google, implement localized play, and further enhance overseas research and transportation capabilities.
Profit forecast and investment rating: considering the launch of more than 21 new games in the past 21 years, the pre-marketing expenditure is relatively large, we downgrade the EPS in 2021 to 0.29 yuan (- 0.03) yuan, and it is estimated that the EPS in 2022-2023 will be 0.35 (flat) / 0.40 yuan, and the corresponding PE in 21-23 years will be doubled in 8-7-6. We are optimistic about the implementation of the company's three major strategies and the company's competitive advantage in the field of female mobile games, and maintain the "buy" rating.
Risk hint: the old swim is declining, the new relay is not as expected, and the supervision of the industry is stricter.