Event: in 2020, the company achieved a revenue of 1.416 billion yuan (yoy+64.37%) and a net profit of 301 million yuan (yoy+78%). At the same time, it plans to pay a cash dividend of 0.1 yuan for every 10 shares to all shareholders. 21Q1 achieved revenue of 516 million yuan (yoy+120%) and net profit of 151 million yuan (yoy+970%), falling into the range of previous performance forecasts.
Comments: the results of the transformation appeared, and the growth was driven by the realization of Internet advertising and casual game content.
Over the past 20 years, the Internet advertising business achieved revenue of 1.102 billion yuan (yoy+527.9%), driving the company's performance growth, accounting for 77.83% of revenue (yoy+57.5pct) and 27.96% of gross profit margin. The revenue of the building advertising business is 197 million yuan (yoy-55.2%), accounting for 13.89% of the revenue (yoy-37.11pct), and the gross profit margin is 58.71%. The income of traditional forging business is 115 million yuan (yoy-46.55%), accounting for 8.09% of revenue (yoy-16.8pct). In the past 20 years, the company actively sought transformation and divested the traditional forging business in Q3, resulting in a certain investment income, and the company achieved an investment income of 64.8 million yuan in the past 20 years. The revenue of the building advertising business Q1-Q3 affected by the epidemic has dropped sharply. Q4 company has optimized the location layout, introduced strategic customers, and the business has recovered rapidly. 100 million Jingshi, a subsidiary of building advertising, has finally achieved a net profit of 75.98 million yuan in 20 years, and the cumulative net profit in 17-20 years has exceeded the performance commitment of 94.68 million yuan. We expect the building advertising business to remain stable in the future. 21Q1 realized revenue of 516 million yuan (yoy+120%), net profit of 150 million yuan (yoy+970%) and gross profit margin of 36.1% (yoy+15pct). Internet advertising and content cash business is growing rapidly, improving the company's performance.
When the advertising alliance is empowered and the casual game advertising is realized, it is expected to grow with the advertising alliance. Previously, the realization of casual games is mainly domestic purchase, advertising realization is mainly based on low inventory, low ecpm patch advertising, and the overall commercialization ability is weak. With the rise of short video and giant advertising alliance, the emergence of in-game incentive video advertising has effectively increased advertising inventory and advertising unit price, and the commercialization ability of leisure games has been greatly improved. In addition, with reference to the development experience of overseas super media, when its own media develops to a certain extent, the giant will set up core off-site traffic and reuse its advertising algorithm in Taiwan and commercialization system. The peak advertising alliance of Google and Facebook accounts for about 40-50% of its own media advertising revenue. According to industry research, the 20-year advertising realization scale of pangolin is about 250-30 billion, and the 21-year target is expected to be 350-40 billion, which is still in the process of rapid expansion in the next few years. The realization of casual game content is expected to benefit from the industry dividend.
The industrialized middle platform brain can empower R & D, and the industrial production and success rate of the company's leisure games can be improved. The company and the byte jointly build the industrialized middle platform brain system, the byte endowment research and development, the company carries on the creative output relying on the data, realizes the leisure game industrialization production, and collects the third party long tail production capacity at the same time.
Through the industrial brain empowerment, the company's leisure game production efficiency and success rate are expected to improve, in addition, the third-party long-tail production capacity will also be used as an effective supplement, the company is expected to gain market share in the rapid growth process of pangolin.
Profit forecast and investment rating: the company's Internet advertising and content cash business progress is in line with expectations, we maintain the previous profit forecast, it is expected to achieve EPS 3.69 (maintenance) / 5.31 (maintenance) yuan in 21-22, an increase of 23 years EPS7.43 yuan, corresponding to the current PE13/9/6X, is optimistic about the company's leisure game content industrial production capacity and success rate to improve, maintain the "buy" rating.
Risk tips: lack of creative content, letter compliance risks, stricter regulatory policies.