Company profile: divest the traditional chemical business and comprehensively transform the mobile Internet. The company was founded in June 2007, originally mainly engaged in fine chemical product research and development, production and sales. In 2016, the company entered the Internet field through the acquisition of Hangzhou Zhe Xin. In 2018, the company controlled Outfit 7, a world-famous Internet company, and owned the copyright of the "talking Tom Cat Family" IP series products. In 2019, the company sold all its chemical business and transformed it into a single main mobile Internet company.
Build an all-living IP operator around the "talking Tom Cat Family". Since the completion of the acquisition of the "talking Tom Cat Family" at the end of 2017, the company has made great efforts to build the company into an ecological operator of Talking Tom around the series of IP, online through mobile Internet applications, animation, film and television to enhance user traffic, realize advertising and games cash, offline through derivatives and IP authorization business, theme park, Tom Cat House and other chain formats, close access to users, to achieve deep realization of IP. Through the simultaneous promotion of online business and offline business, the company has formed an online and offline coordinated development of the Internet culture industry ecological chain.
Tom Cat IP series applications are eye-catching. Since the launch of the first generation of products such as "talking Tom Cat" in 2010, the company has launched more than 20 leisure mobile applications, with more than 10 billion global downloads and more than 370 million monthly active users. the huge active user base has been maintained for more than 9 years. While continuing to operate the original IP series of mobile applications, the company continues to develop new products with rich product reserves. In terms of product cash, the company has explored a mature advertising cash model. Through its own mobile application products, the company operates and cooperates with App Store, Facebook Inc, Google Play and other platforms, as well as dozens of well-known marketing service providers around the world, including Applovin, Goole, Twitter, Smaato, pangolin Advertising Alliance and other well-known advertising service providers.
Profit forecast and valuation analysis. We estimate that the EPS of the company from 2019 to 2021 is-0.68,0.26,0.30 yuan respectively. The company suffered a substantial loss in net profit in 2019, mainly due to impairment of assets such as goodwill, accounts receivable and long-term investment. For an one-time effect, considering the divestiture of the company's chemical business in 2019, the impairment of Hangzhou Zhe Xin's goodwill and non-performing accounts receivable and other items, the company's financial report quality will be greatly optimized, and the future business will be more focused on Outfit 7 with Tom Cat as the core, and its operation is expected to be improved. With reference to comparable companies, we give the company 20-23 times dynamic PE in 2020, corresponding to a reasonable value range of 5.20-5.98 yuan per share. For the first time, the coverage gives the company a better rating than the big city.
Risk hint: game policy uncertainty; IP derivatives landing less than expected; the risk of lifting the ban on restricted shares.
