Event: the company released the China report after August 26, and the traditional business was under pressure by the epidemic.
Comments:
The epidemic situation and other factors affect the overall performance under pressure. 22H1 achieved operating income of 162 million yuan, down 17.65% from the same period last year, of which game business revenue fell 9.15% to 115 million yuan, mainly due to the impact of the company's game scheduling, and blockbuster games will be launched in the second half of the year; communications and information business revenue dropped 34.88% to 44 million yuan, mainly due to the postponement of some of the company's new infrastructure projects due to COVID-19 's epidemic situation. 22H1 realized a net profit of 20 million yuan, an increase of 13.17% over the same period last year, and a deduction of 18 million yuan for non-net profit, an increase of 18.37% over the same period last year. After splitting, the operating income of 2022Q2 in a single quarter is 83 million yuan (yoy-20.95%,qoq + 5.06%); the net profit of Q2 in a single quarter is 8 million yuan (yoy+14.29%,qoq-33.33%); and the deduction of non-net profit in a single quarter of Q2 is 8 million yuan (yoy+28.41%,qoq-20.56%).
The profitability has been improved, and the ability of cost management and control is excellent. 2022H1's overall gross profit margin rose to 55.28% from 53.83% in the same period last year. In terms of business, the gross profit margin of the company's game business was 72.88%, up 2.21 pct from the same period last year; the gross profit margin of the communications and information business was 14.92%, down 10.33pct from the same period last year. 22H1's parent net interest rate was 12.35%, an increase in 3.21pct compared with the same period last year.
The expense rate of 22H1 remained basically stable, with sales / management / R & D expense rates of 1.85% 13.58% and 22.22% respectively, and year-on-year changes of-0.18 per cent and 0.89 per cent respectively.
The follow-up product reserve is rich, and the rhythm of the game going out to sea is clear. The company adheres to the development idea of "boutique R & D + well-known IP", and actively promotes the game to go out to sea. At present, the company has many excellent IP, including "Legend of Wonderland RO", "Qin Mingyue", "Dream Dragon Family" and so on. At the same time, the company has successfully signed the license of "Gu Jian Qitan III" IP game adaptation, which is expected to give full play to the company's rich experience in research and development of large IP products. The company has a rich reserve of follow-up products, and the company has signed Korean distribution agreements with Gravity and Nuverse on its main products "Wonderland Legend RO: the birth of a New Generation", and plans to launch in South Korea in the second half of the year and Europe and the United States next year; "Star Awakening" and "Wonderland Legend RO:
New tours such as Fuxing H5 "and" Dream Dragons "are expected to be launched in various regions at home and abroad in the past two years.
In the establishment of the new project, the company has previously established a self-developed IP MMO product, which is currently under research and development; at the same time, the company will set up MMO and VR projects and start R & D work based on "Gu Jian Qitan" IP. We believe that the company's rich reserves can provide a guarantee for the company's supply of new games, and is expected to release performance increments when the game is launched. At the same time, the company speeds up the pace of going out to sea and is expected to open up overseas markets through the launch of blockbuster games.
We will steadily optimize the structure of communications and information services and broaden the digital track. In the first half of the year, the company continued to take the initiative to shrink the market area, actively abandon the less profitable projects and actively optimize the business and personnel structure. At the same time, the company actively develops new business directions, actively interacts with the central enterprises with industry advantages and state-owned enterprises in the province, and explores the opportunities brought about by the upgrading and innovation of information, science and technology, logistics and other industries in the smart city digital enabling business. and through the introduction of industry technical personnel and independent training model to improve team strength, to prepare for follow-up project undertaking and construction.
In addition, we believe that the company will fully benefit from the "East and West" project, and the demand for communications design and planning consulting business is expected to be boosted, thus catalyzing the release of performance.
Focus on the layout of VR new business type, committed to becoming a leading provider of VR game content. The company is optimistic about the development prospect of the VR/AR industry, which is similar to the early stage of smartphone development, so the company regards VR games as an important strategic direction, expanding its business from "games + mobile phones" to "games + VR". In the first half of the year, the company has completed the construction of part of the VR team and there are two VR games in research and development. in the follow-up, several VR studios will be formed within 2-3 years through recruitment, partnership, holding, shareholding and other ways, and strive to produce a number of boutique VR games every year. At the same time, the company will give full play to the advantages of good cooperation between Internet enterprises and game publishers, and maintain the business docking with the mainstream VR/AR equipment platform in the market.
Investment advice: the company currently has many excellent IP, in the "boutique games + well-known IP" strategy, the company is expected to continue to expand the IP matrix. At the same time, the company's existing game reserve online rhythm is accelerated, including "Wonderland Legend RO: the birth of a new generation" is expected to launch in 2022 South Korea, next year, Europe and the United States and other regions, "Wonderland Legend RO: revival H5", "Dream Dragon" and other new games are expected to launch in the past two years, domestic and foreign regions, to help release incremental performance to promote the company's growth. In addition, the company increases the layout of the VR game field, plans to set up a number of VR studios in the next 2-3 years and regularly launch VR boutique games, which is expected to create new revenue bright spots for the company.
Risk factors: the risk of intensified market competition, the risk of stricter regulation in the game industry, the risk of underperforming the online game, the risk of exchange rate fluctuations, and so on.
