The acquisition of Meisheng Yuan comprehensively transformed the game R & D and operation business, and the two-wheel drive of "stand-alone + online games" brought new highlights. In May 2016, the 100% stake in Meisheng yuan acquired by the company with a total consideration of 3.4 billion yuan has been listed, and since then the company has comprehensively transformed the game R & D and distribution field. Meisheng Yuan is the leader in the domestic stand-alone mobile game industry, covering all the distribution channels of mobile games from offline to online. According to the announcement of the acquisition, we estimate that there are nearly 200 channels for Meisheng Yuan to establish business cooperation, and more than 100 mobile stand-alone games have been jointly issued. In the future, the company is expected to increase the layout of the release and operation of mobile online games, superimposing the new increment of online game release on the basis of stand-alone game release, which is expected to further open the profit space.
Meisheng combined table led to high performance growth, with a three-year commitment to an average growth rate of 62%. According to the company's 2017H1 performance KuaiBao, the company realized operating income of 1.178 billion yuan (+ 95.13%) and net profit of 204 million yuan (+ 88.49%), maintaining rapid growth. Meisheng began to consolidate in May 2016. From May to December 2016, Meisheng achieved a revenue of 635 million yuan and a net profit of 256 million yuan. With the injection of high-quality assets, the company's 2016 gross profit margin was 31.25% (7.33% higher than that of the same period last year). And the net interest rate of the three expenses remained stable and increased significantly. In 2015-2017, Meisheng promised that the net profit would not be less than 180 million yuan (actual 184 million yuan), 320 million (actual 365 million yuan) and 468 million yuan. The industry bet was exceeded in the first two years of the commitment period, and the average growth rate of committed performance in three years was 62%.
From the industry level, mobile games are the most prosperous subdivided areas, and the issue and operation of stand-alone and online games is becoming more and more important. According to CNG data, end-game and page games showed negative growth for the first time in 2016, with mobile games accounting for 81.92 billion (+ 59.2%) accounting for 49.5% of the total scale. The first super-end games became the largest category, and the ratio of stand-alone games to online games in mobile games was roughly 2:8. Meishengyuan focuses on the mobile phone stand-alone game market, and has obvious advantages in this segment. In the transformation of online games, the company will continue to benefit from its accumulated online and offline distribution capabilities, through investment layout to form a complete ecological closed loop in the fields of research and development, distribution and promotion.
The "game + traditional" business has performed well to create a sustained and stable "platform" company. In terms of traditional business, the company is one of the leading listed companies in the decorative paper industry, and its traditional business performance is expected to pick up due to the rebound of the industry boom. In terms of game business, the company has firmly occupied the first echelon of stand-alone mobile games, occupying the core position in the industrial chain, and the innovation of charging mode and operation mode has brought good results. Based on the annual report data, we estimate that the number of stand-alone games released by the company has increased from 30 per month in 2016 to 35 per month in 2017. in the future, we will transform the issuance of online games based on operational experience to create long-term "waist" products according to our own advantages. so as to smooth the risks brought by a single project and build a platform game company.
Profit forecast: according to our traditional and game revenue assumptions, the company's EPS is expected to be 0.59,0.77 and 0.97 yuan respectively from 2017 to 2019. With reference to the consensus expectation of the comparable company's PE in 2017, we give the company a valuation of 28 times in 2017, corresponding to the target price of 16.52 yuan. Maintain the buy rating.
Risk hint: the performance of mobile games products is not as expected, the profit commitment is not up to standard, and the competition in the industry is fierce.