High-profile women turn to game makers.
We think there is still a lot of room for women to expand into the game. The company is the leader of the antique game track for women, with unique competitive advantages for women to the game, including (1) mainly story women to mobile game products, compared with most non-story women to games (usually leisure) users are more sticky and more willing to pay; (2) the category tends to be more feminine, which can meet the needs of a wider range of female groups, in line with the development trend of women to the game industry. And (3) having a research and development team that attaches importance to copywriting planning and has a deep understanding of female players, combined with the operation model promoted by data analysis, has improved the probability of launching popular style products.
Strong self-research and spontaneous ability, long product life cycle
At present, all the online games of the company are developed spontaneously, and it has established an integrated business model that integrates development, distribution and management capabilities, and has global distribution capabilities. It has established a long-term and stable cooperative relationship with mainstream distribution platforms such as Apple Inc App Store, Google Play and hard core alliance, and has a social platform application, "fun friends", which is used to distribute self-developed game products and maintain core players. The company has a strong operating ability and pays attention to operational details, and can prolong the product life cycle through self-release. For example, the update frequency of "floating Life for Qing Song" which has been online for nearly 2 years is higher than the average of the same kind, and the running water is still robust. "Xi Fei Zhuan", which has been in operation for more than 6 years, still contributes considerable income. In addition, the company has invested in a number of R & D studios in the past two years, signed agency agreements with its products, and expanded its source of income by virtue of the company's strong issuing capacity. The project "code: W" of the invested studio has been tested overseas.
The main products are high-quality products, and the big new products will be launched soon.
The company pays attention to high-quality distribution operation, and there is no lack of popular products in the product portfolio, such as "Xi Princess Biography", "Xi Princess Q Biography", "Palace Mobile Tour", "floating Life for Qing Song" and so on. Although most of the online products are in the mature stage, "floating Life for Qing Song", which contributes more than half of its income, still maintains a relatively stable flow. "Lingyunuo", a national-style social mobile game with more R & D investment, is progressing smoothly and is expected to be launched this year. Female motivational mobile game du Lala Promotion is expected to be launched next year, which is worth looking forward to. In addition, the company plans to create a "floating Life" IP, which will release five songs, and a second product is expected to be launched in 2023, sustainably supporting revenue growth.
The "neutral" rating is given for the first time, with a target price of HK $1.34 because the performance of the old game is affected by the life cycle and the new game has not yet been released. The company's revenue in 21 years is expected to fall by 25.1% to 1.63 billion yuan. However, the 22-year blockbuster games Lingyunuo and du Lala's promotion will benefit from a substantial increase of 35.4% to 2.21 billion yuan. Net profit will fall by 41.9% from about 500 million yuan in 20 years to 290 million yuan in 21 years, and increase significantly by 43.6% to 420 million yuan in 22 years. We use the more common PE valuation method to give the company a target PE of 8.4x / 5.8x for 21 / 22, which is lower than the historical average (10.3x) to reflect that the market is still on the sidelines, with a target price of HK $1.34and a potential increase of 9.8%, covering the "neutral" rating for the first time.
Risk tips: (1) industry regulatory risks; (2) the performance of the new game is not as good as expected.