Core views
The company's performance reached a record high in 2023 under product cycles such as “Original Journey” and “Space Killing.” No key new products were launched in the first quarter of '24, but revenue still achieved month-on-month and year-on-year growth, and profit side performance slightly exceeded expectations. The core is that the company's long-term operating capability of old products is gradually being reflected.
“Journey” and “Ball” have more stable sales than expected, and their resilience to risks is strong. “Journey” IP and National Battle gameplay are scarce and competition is limited. After nearly a year of operation, “Original Journey” has stabilized at around 50 in the last 3 months. “Ball Ball” has shown a steady upward trend in rankings since 2H23, with “Egg Boy” and “Yuanmeng” being launched one after another.
Looking at the year-round dimension, the company's performance growth is strong and continuous. Followed by the official version of “The Original Journey”, the “Journey to the King” applet, and increased commercialization of “Moonlight Night” and “Space Killing”, all of which can contribute to the increase. Furthermore, with many positive changes such as the establishment of a new SLG project and the appointment of a new CEO, the company is expected to enter a new round of product cycles.
The AI layout is fast-paced, and we look forward to the advent of native AI games. On the one hand, the number of parameters in the self-developed model is lower than that of the general model, and the inference cost is even lower. We believe that AI+ text reasoning games will benefit first, and we are optimistic that the AI gameplay of “Space Kill” will gradually break the circle.
We expect the company's net profit to be 1.48 billion, 1.70 billion, and 1.84 billion yuan in 24-26, up 36%, 15%, and 9% year-on-year. The closing price on May 7 corresponds to current valuations of 15.6x, 13.6x, and 12.5x, maintaining the buying rating.
occurrences
The company achieved revenue of 2.92 billion yuan in '23, +44% year-on-year, and realized net profit of 1.09 billion yuan, +28% year-on-year, minus 1.37 billion yuan, +35% year-on-year. Q1 revenue was $70 million, +37% year over year, back to mother of 350 million, +44% year over year, deducted not 400 million, +54% year over year.