Summary of the report
Company overview
Razer is the world's leading game life brand, focusing on the development of high-end game products that meet the needs of players. The company's users include early users of new technology, millennials and some of the most high-profile trend leaders, such as top e-sports contestants, movie stars, A-list musicians and social media celebrities.
The company has the largest integrated game ecosystem in the world, covering hardware, software and services. The company's hardware products include high-end game interface devices (including high-precision mice, full custom keyboards, sound devices, mouse pads and game console controllers) and computer systems (including laptops).
The company's Razer software platform has more than 35 million registered users, including Razer Synapse Thunder Cloud, the Internet of things platform, for users to use the company's software platform through hardware devices; RazerChroma Magic Color, the company's exclusive RGB lighting technology system; and Razer Cortex Lei you, a full-function game launcher, game optimizer, game aggregator and price comparator.
In terms of services, the company recently launched zGold virtual credit score service to realize cash through the software platform.
The company's revenue in 2014-16 was 11.5% CAGR and reached $392 million in 2016; as a result of increased investment in research and development, the company recorded a net loss of $59.62 million in 2016. 1H17's revenue rose 29.7% year-on-year to $198 million, with a net loss of about $52.1 million.
Industry status and prospects
The game market is the fastest growing part of the global entertainment industry, and the 2021E global game market is expected to reach US $132.7 billion.
It is estimated that the number of players in the global e-sports market of 2017E-21E will reach 14.6%, to 665 million in 2021E, of which Chinese players will account for the largest proportion, reaching 32.8%.
The global e-sports market size of 2017E-21E is expected to reach 24.1% CAGR to US $1.65 billion of 2021E.
Advantages and opportunities
The leading global game life brand.
Occupy a leading position in a large and growing potential market.
An integrated ecosystem brings users an extraordinary game and entertainment experience.
Weakness and risk
The game industry is growing more slowly than expected.
Unable to continuously develop innovative and popular products.
The implementation of cash is slower than expected.
Valuation
We assume that the company's 2H17E revenue keeps the growth rate of 1H17, and the price-to-sales ratio of 2017e is about 6.5-8.9 times according to the recruitment price range, which is 0.6 times higher than that of Apple Inc (APPL.US) / Logitech (LOGI.US) / MSI (2377.TT), respectively. However, we believe that the company has the world's leading game life brand, and its market share is expected to further increase in the future. Coupled with e-sports user community realization is expected to bring valuation improvement in the future, we give the company an IPO rating of 8.