Yao Ji Technology announced that in 2023, the company's total revenue was 4.3 billion yuan (yoy +10%), with 5.62 billion yuan and 519 million yuan (yoy +61.4% and +51.7%), respectively; in 2023, the company plans to prepare various asset impairment amounts to a total of 886.1 million yuan; and plans to distribute a discovery dividend of 9.00 yuan (tax included) for every 10 shares to all shareholders in 2023. Looking at a single quarter, 2023Q4's revenue was 735 million yuan (yoy -33.2%), with profit attributable to mother of 0.05 billion yuan (yoy -91.5%), minus non-net profit of -0.04 billion yuan (slight loss); 2024Q1's revenue was 982 million yuan (yoy -17.38%), with net profit attributable to mother and 150 million yuan (yoy -23.9% and -21.6%), respectively.
Key points of investment
The company's main business continued to consolidate in 2023
In 2023, the company's main business revenue of playing cards, games, and digital marketing was 10.9 billion yuan, 1.23 billion yuan, and 19.01 billion yuan (yoy -1.57%, +1.9%, +24.9%, accounting for 25.3%, 28.5%, and 44.38%, gross margins of 26.56%, 96%, and 5.46%, respectively). In terms of categories, on the poker business side, the new poker product “Yao Ji Whipped Egg” has been launched in recent years, and is loved by consumers. “Yao Ji” poker is a well-known national poker brand. The company actively promotes the “annual production base construction project with an annual output of 600 million playing cards” to enhance the company's overall competitiveness; on the game business side, game revenue is relatively stable through iterative product updates in 2023; on the digital marketing side, the company is a long-term ecological partner of a huge number of engines, providing customers with high-value marketing services, while the company's ability to explore new ways to help the brand's long-term business growth.
In 2024, firmly develop the “Big Entertainment” strategy to expand the scale of playing card production
In 2024, the company will expand the production scale of playing cards and further consolidate the basic market. Themed playing cards not only have collectible value, but are also a good cultural and creative product, and their commercial value has room for exploration; the game business will expand the layout of overseas markets to enrich the company's game products and profit models. At the same time, the company will continue to deeply cultivate the digital marketing circuit, and the Shanghai International Short Video Center base built by its holding subsidiary Xiting Culture is attracting steady investment.
Expanding the sports culture industry's new sports consumption is expected to resonate with the main business. In January 2022, the company is looking ahead to lay out sports culture collectible card issuers and trading platforms, strategically invest in cards, promote the development of the card shopping card primary market business, promote the expansion of the card shopping star card secondary market community, further improve the company's layout in the card products and sports culture industry, build a comprehensive leisure and entertainment industry chain, and drive the development of new sports consumption.
Profit forecasting
It is predicted that the company's revenue for 2024-2026 will be 47.1, 51.5, and 5.68 billion yuan, respectively, and EPS will be 1.56, 1.78, and 2.07 yuan respectively. The PE corresponding to the current stock price is 16.6, 14.5, and 12.5 times, respectively. The company's main business will continue to consolidate in 2023, and the scale of poker production is expected to expand in 2024. Looking at the company to build a national brand in the medium to long term, the commercial value of its “Yao Ji Poker” brand is also expected to empower gaming, marketing and other businesses, based on the main business Steady, new businesses have room to explore, thereby maintaining a “buy” investment rating.
Risk warning
The risk of policy regulation, the risk of game products falling short of expectations, the risk of brain loss, the risk of rising R&D costs, the risk of impairment of goodwill, the risk of media traffic suppliers being concentrated, the risk of tax policy, the risk of policy supervision, the risk of market competition, the risk of raw material price fluctuations, the risk of new business falling short of expectations, and the risk of macroeconomic fluctuations.