Main points of investment
Our view: due to the strategy adjustment of reducing agents, strengthening self-research and focusing on quality, the launch speed of the game lags behind the original plan by more than a quarter, and the pressure on short-term performance is relatively large. we expect to better reflect the effect of the company's game strategy adjustment as soon as 2016 at the earliest. We believe that the company's development prospects and operating conditions are good, with a clear development policy and strong execution, and we suggest that we should pay attention to the pan-entertainment development of the follow-up company and the development of overseas markets.
The performance of "10 cold" is lower than expected, and the performance of Q3 in 2015 is weak. According to the financial report, 2015Q3's total revenue was 115 million yuan, down 34.2% from the same period last year and 38.2% from the previous year. The net loss attributed to the parent company was 18.208 million, compared with a loss of 117 million in the same period last year, and a profit of 65.485 million in the previous quarter. The loss in the main business was 26.72 million yuan, compared with a loss of 523.6 million in the same period last year, and a loss of 1860.2 million in the previous quarter. Gross profit margin was 35.1%, 46.42% in the same period last year, and 37.2% in the previous quarter. The decline in performance is mainly due to the adjustment of the company's game strategy. In addition, the popularity of "10 Cold" has declined rapidly, with Q3 hovering around 100th in the iOS bestseller list, while other games are also entering the end of the life cycle, plus delays in the launch of new games are a further drag on revenue throughout the quarter. The decline in gross profit margin is more due to the relatively high revenue of "10 cold" as an agent game, but we think that Q4 and future gross profit margin will gradually return to the original level of about 50% with the increase of self-developed games.
Take self-research as the center, game boutique and internationalization: the company's game team has made a larger strategy adjustment, less agent games, and strengthened investment in self-research. At present, the adjustment is basically completed. There are six independent game development teams in China. In addition, there are one R & D team in the United States and one in South Korea. Management said that it will continue to use IP to do boutique games. A good IP will bring initial popularity, but only good quality will bring subsequent word-of-mouth. We believe that Blue Port's advantages are still MMO, RPG and ACT games, and the follow-up IP games will be of this type, and we expect the appearance to be better than that of [10 cold] and [Zhen Huan]. Overseas market is the strategic direction of the company, which plans to invest US $2000 in the next three years, and game products are expected to be launched in 2016. We believe that the low fees of overseas market platforms and the absence of a separate layer for distributors are more conducive to the development of R & D companies, but cultural differences and localization promotion will be the challenges that need to be faced.
Future prospects: [random play of the Chronicles of the three Kingdoms] will be launched in Q4, including innovative ways of playing, worthy of attention. The Battle of Shushan will be released next year, and the film will be released later. We think the entire IP operator is through a deep-seated plan, and it is expected that the popularity of the Battle of Shushan will last longer. The animation of [Young Feng] has been released recently, and it will interact with the game in the future and have the opportunity to become a popular style. [Langang Film and Television] continues to make active preparations and is expected to take action in 2016.
