Event
On August 5, IGG released its results for the first half of 2021. During the reporting period, the company achieved HK $3.237 billion in revenue, up 33% from the same period last year, and its return profit was HK $577 million, down 44% from the same period last year.
Brief comment
The income of China News reached a new high, and the R & D investment showed a high growth.
During the reporting period, the company achieved revenue of 3.237 billion Hong Kong dollars (about 2.7 billion yuan), an increase of 33% year-on-year and a record high. Its main contribution came from the recovery of the company's main game, the Kingdom era, which achieved 33% flow growth in the same period. On the profit side, the company's return profit was 577 million Hong Kong dollars (about 480 million yuan), down 44% from 1.032 billion Hong Kong dollars in the same period last year. On the one hand, affected by market fluctuations, investment income dropped from 423 million Hong Kong dollars in the same period last year to 88 million Hong Kong dollars in the current period. On the other hand, the company stepped up marketing efforts to increase purchases and IP joint venture as the "Kingdom era".
Maintain vitality to protect the escort, at the same time in R & D investment, greatly expand the size of the team, enhance the follow-up diversified product development capability. During the reporting period, the number of employees increased to 2619 from 2022 in the same period last year, while staff costs increased from HK $262 million in the same period last year to HK $515 million this year, squeezing profit margins.
The main game is still strong, and the new products are continuing to make efforts.
In the first half of the year, the company's "Kingdom era" maintained its peak, bringing the company HK $2.737 billion in revenue, accounting for 84.6% of total revenue, with an average monthly flow of HK $480 million (US $61.7 million), in line with market expectations. As of the semi-annual report, the Kingdom era has accumulated 440 million registered users, MAU has increased from 1370 million at the end of the 20th to 20 million, and a series of marketing methods such as IP joint venture have achieved remarkable results. In addition, the women who launched the game "time Lady" in the second half of last year have accumulated 9.8 million registered users and 1 million MAU, bringing HK $156 million to the company in the first half of the year, with an average monthly contribution of HK $26 million. According to the plan, this month, the Chinese version of "time Lady" will be launched in the mainland market, and the follow-up company will continue to launch new storylines to enrich the game content and enhance players' stickiness. With the continuous penetration of "time Lady" in the global market, the growth of running water is expected.
The reserves of new tours are sufficient, and the diversification of fine products is being promoted.
The company's positioning is global, and in the past development, it is famous for SLG games. However, with the intensification of market competition and the contingency of explosive games, boutique diversification is the only way for every game company to continue to develop. In the past year, the company has increased its investment in research and development, expanded the scale of talents, and is constantly trying to diversify its layout.
It is the company's successful breakthrough in the field of women. The follow-up company will also launch "Project Mythical Heroes" placement games, which are expected to be launched within August; "Project MR2.0" strategy games; and "Project LW" medieval magic theme SLG. In addition, the company is working on more than 30 game products, more than half of which are SLG categories, and other types are also being tried.
Investment suggestion: we expect the company's main profit from 2021 to 2022 to be 1.05 billion yuan and 1.3 billion yuan. Maintain a "buy" rating with a target price of HK $14.8, corresponding to 14 times PE in 2021 and 11.2 times in 2022.
Risk tips: global game buying competition aggravates the risk, new product launch deferred risk and so on.