Main points of investment:
Revenue and profits have declined, and new games will be launched one after another:
The company realized revenue of 322 million yuan in 2015, down about 5% from the same period last year, and net profit of 94.99 million yuan, down 44.1% from the same period last year. If equity incentive fees and listing fees are not taken into account, the adjusted net profit is about 200 million yuan, down 5% from the same period last year. Equity incentives are mainly listed in the company at the end of 2014, and the size of the team was expanded in 2015. In order to encourage the team to issue more equity, it is expected that equity incentive fees should not be high this year. At present, the main mobile games operated by the company include "defend radish 1 and 2", "Immortal Road Mobile", "Blade of the three Kingdoms" and "lost Journey to the West", all of which have a life cycle of more than one year. among them, defending radish and Shenxian Road has entered the end of the product life cycle, the number of paying users has declined considerably, and the number of paid players of mobile casual games dropped by about 52% in 2015 compared with the same period last year. In addition, Blade of the three Kingdoms and lost Journey to the West have entered a platform, providing a stable income for the company. The company expects to launch six new games this year, including five RPG mobile games and one mobile casual game, including "defending Radish 3", which will be launched on the Tencent game platform, "Shenxian Road 2" and several other RPG games.
The core products are expected to be launched in the second quarter and the second half of the year, respectively, and players maintain high expectations:
As the internal requirements of the flying fish are very strict, internal tests need to be carried out repeatedly. After the completion of the internal test, the company needs to adjust the game content and play accordingly according to the feedback data, so we expect that after many rounds of polishing, "Defense Radish 3" should be a popular casual game. In addition, we have tracked the relevant online communication groups (post bar, QQ group, etc.) with the theme of "defending radish" series, and fans are interested in "defending radish 3".
Still maintain high expectations, it is expected that the game will be online in the second quarter of Tencent game platform.
Shenxian Road 2 is a joint release of the company and 360. The previous version of the game has a history of nearly five years. It was first launched in May 2011 and its mobile version was launched in January 2012.
According to data released by the company, the game has a cumulative total of more than 200 million users. The new version will add new ways of playing and designing new pictures.
Maintain performance expectations for 2016 and maintain ratings highly recommended:
Although the launch time of the company's new game is a little later than we previously expected, which will cause certain losses to the company's total flow in fiscal year 2016, but the company's repeatedly tested and modified products should be able to greatly improve in monetization and user viscosity. The current stock price corresponds to the 2016 PE valuation level of about 14 times, the company has strong game research and development strength and a number of high-quality IP, belonging to the high-quality target. The rating is highly recommended, with a target price of HK $2.91, or about 19 times the 2016 PE.