Description of the event
The company disclosed 24Q2 results. 24Q2 achieved revenue of 4.482 billion (YoY +12.16%, -5.65% YoY), net profit of 0.648 billion (YoY +43.63%, +5.25%), net profit of 0.659 billion (YoY +47.99%, YoY +6.93%).
The company plans to distribute 2.1 yuan for every 10 shares, for a total cash dividend of 0.466 billion yuan, accounting for about 72% of the company's Q2 net profit.
Incident comments
The advantages of the mini-game circuit continue, and the stock game performance is steady
The company's mini game product “Seek Out a Thousand” is still at the top of the WeChat Mini Game Bestseller list. Together with “The Unknown Man,” “Spirit Master,” “Soul Prologue,” “Call Me the Treasurer,” and “Overlord,” the company has established strong competitiveness in the mini game field. The overall flow of products in stock is expected to be stable but will naturally decline, resulting in the company's Q2 revenue -5.65% month-on-month.
Overseas game revenue increased month-on-month in the first half of the year. New overseas tours gradually launched 24H1 overseas, such as “Mecha Domination,” “Primal Conquest: Dino Era,” and “Yes YourHighness.” The highest monthly turnover of mobile games distributed by 24H1 worldwide exceeded 2.3 billion yuan. This indicator was the same as in 23 years. In the first half of the year, the company achieved overseas revenue of about 2.9 billion, an increase of 2.78 billion month-on-month compared to 23H2.
Early launch or sequential recycling combined with marketing optimization, Q2 performance continued to improve month-on-month, or due to the fact that several overseas games launched in Q2 were mainly agents and the agent products in the top games were relatively stable, the company's 24Q2 gross margin fell to 77.41% year-on-month; due to relatively few new games launched in Q2 and optimized launch, 24Q2's sales expenses were -14.6% to 2.47 billion month-on-month, and the sales expense ratio was 55.1% (-4.0pct year-on-year, -5.8pct month-on-month). Furthermore, investment income and profit and loss from changes in fair value also partially affect the company's performance.
The Q2 equity distribution plan was disclosed. The dividend ratio for the first half of the year was 73%, and the dividend rate for half year was 3.1%. The company plans to pay 2.1 yuan for every 10 shares, which is the same amount as the Q1 distribution plan. In total, the cash dividend was 0.466 billion yuan, accounting for about 72% of the company's Q2 net profit, maintaining a high dividend ratio. The half-year dividend rate at the closing price on August 27 is 3.1%.
A new tour cycle has started, and the product reserve is rich
Since the launch of “Time Grocery Store” on August 1, it has been in the top 50 iOS bestsellers. In addition, the company's Guoman Oriental fantasy MMORPG “Douro Continent: Soul Hunting World” and various reserve products have been approved, covering various categories such as MMORPGs, SLG, cards, simulation management, etc., and new games may increase performance.
Profit forecast and investment advice: We expect the company's net profit to be 2.64 billion and 3.04 billion in 2024 and 2025, respectively, corresponding PE of 11.5 and 10.0 times, respectively, to maintain a “buy” rating.
Risk warning
1. Risk that product version approval, launch progress and flow performance fall short of expectations; 2. Industry regulatory risks.