Revenue and net profit continued to grow rapidly in 2020, and profitability continued to improve. The company achieved revenue of 287 million yuan in 20Q4 (YOY +35.56%, QOQ +9.78%) and achieved net profit of 85 million yuan (YOY -1.83%, QOQ -14.83%). In 2020, the company achieved revenue of 1,024 million yuan (YOY +46.96%) and net profit of 395 million yuan (YOY +73.08%); the company's net interest rate was 40.23% (YOY+7.42PCT), which further strengthened profitability; achieved operating cash flow of 560 million yuan (YOY +79.4%), and the quality of operations continued to be optimized. In 2020, the company plans to distribute a cash dividend of 4.1 yuan for every 10 shares, with a dividend ratio of 25.5%. Based on the closing price on April 16, the dividend rate is 1.5%.
Client-side mobile games go hand in hand, and major products have won many industry awards. The company's main business is the development and operation of online games. While maintaining the market share of client products, the company increased its investment in the development and operation of mobile game products. In 2020, the company's client games achieved revenue of 506 million yuan (YOY +22.16%); mobile games achieved revenue of 512 million yuan (YOY +86.41%), and the revenue share increased 10.58pct to 50.02% over the previous year. The company's main mobile game “Dream Three Kingdoms 2” won the “2020 China Top 10 Client Game Nominations”, the 2020 newly launched mobile game “My Knight” won the 36th Zhejiang Outstanding Publication Editor's Award, and many products have won many awards in the industry.
Actively expand the layout of overseas markets in line with the trend of domestic games going overseas. The company successively set up subsidiaries in Singapore and Japan in June and October 2020, laying a solid foundation for the company's business to go overseas. In 2020, the company's overseas business achieved revenue of 103 million yuan, an increase of 82.87% over the previous year, and the share of revenue rose to 10.05%. In the future, the company will actively deploy overseas R&D and distribution, steadily promote global online game R&D capabilities, expand overseas distribution channels and operations, and effectively promote overseas business development.
Continue to increase investment in R&D and deepen the talent training and incentive system. The company has always been guided by market demand and user experience to actively promote R&D and innovation work. In 2020, the company invested a total of 166 million yuan in research and development expenses, an increase of 41.53% over the previous year, and the R&D expenses rate reached 16.21%. The company authorized 15 new invention patents and successfully applied for more than 53 computer software copyrights, 36 art copyrights, and 119 trademarks. In order to fully mobilize employees' enthusiasm and creativity, the company implemented the 2020 Restricted Stock Incentive Plan, which actually granted 3.967 million restricted shares to 189 incentive targets for the first time, fully mobilizing the enthusiasm of core technical cadres.
Profit forecasts. We expect the company's 2021-2023 EPS to be 2.25, 2.69, and 3.20 yuan/share, respectively. Referring to comparable companies, we gave the company 15-18 times more dynamic PE in 2021. The corresponding reasonable value range was 33.75-40.50 yuan/share, maintaining the company's “superior to the market” rating.
Risk warning. The postponement and performance of mobile games fell short of expectations, the flow of old products declined rapidly, and there were risks in overseas markets.
