The DNF mobile game public beta reached the top of the double list, which is expected to contribute to a considerable increase in performance and maintain a “buy” rating
On May 21, “Dungeons and Warriors: Origins” (“DNF” mobile game) went public beta, and after it went live, it reached the top of the iOS free list and best seller list. During this period, the service even briefly crashed due to too many users entering. According to WeChat games, the “DNF” mobile game has been downloaded more than 4.57 million, and the number of downloads on TapTap has exceeded 700,000, and the number of new users is huge. In addition, the rating of the “DNF” mobile game on the TapTap platform also increased from 2.7 to 3.8 before launch, and the game's reputation improved. We believe that the “DNF” mobile game, as one of the most popular online games in the mobile game era, has accumulated a huge “DNF” IP user base. Players have been looking forward to the launch of mobile game products for a long time. At the same time, with the traffic advantages and rich mobile game distribution experience of social platforms such as Tencent WeChat and QQ, and the “DNF” mobile game product itself, the original restoration and optimization innovation of the “DNF” mobile game itself is expected to continue the impressive performance of the first day, bringing a considerable increase in the company's performance. We maintain our profit forecast for 2024-2026. We expect the company's net profit to be 1567/1873/205.1 billion yuan for 2024-2026, respectively, with corresponding EPS of 16.6/19.9/21.8 yuan (due to changes in share repurchases), and the current stock price corresponding to PE is 21.4/17.9/16.3 times, respectively. We are optimistic that new games and video models will continue to drive growth and maintain a “buy” rating.
Game reserves are abundant, or continue to drive the growth of the game business
The company's reserve games include “Starbreak” (scheduled 2024Q2), “Wangzhe Wanxiang” based on Wang Zhe IP, as well as “World of Taris” (released on June 19), “Need for Speed: Assemble” (scheduled 2024Q3), “Operation Delta”, and “Let's Create! “Our Planet,” “Rainbow Falls,” “Pokémon Gathering,” “Ace Warrior 2,” “Mega Man 11,” etc. In addition, the company will hold the SPARK2024 Tencent game press conference on May 28, and may release more new product information. The rich product line is expected to drive the company's game business to continue to grow.
The commercialization of video accounts and the rapid development of mini-games may jointly drive the high-quality growth of the company's WeChat video account 2024Q1. The total user time of the WeChat video account increased by more than 80% year-on-year. As a source of high-quality revenue, video account advertising revenue and merchant technical service fees contributed to the increase in the company's gross profit and operating profit exceeding the increase in revenue. The total usage time of 2024Q1 WeChat Mini Program users increased by more than 20% year over year, and mini game traffic increased 30% year over year. We believe that based on WeChat's huge traffic, video e-commerce and advertising still have plenty of room to monetize, while mini-games also maintain rapid development, or jointly drive high-quality growth in the company's performance.
Risk warning: The launch time or performance of the new game falls short of expectations, the commercialization process of video accounts falls short of expectations, etc.