Updated : Mar 25, 2020 in empbpoua

Gigabit (603444): New and old products work together to push 19Q2 performance to a record high and track future product performance

Gigabit (603444): New and old products work together to push 19Q2 performance to a record high and track future product performance

Event: The company announced the 2019 Interim Report and achieved revenue of 10.

710,000 yuan (+37 compared with the same period last year).

7%), net profit attributable to mother 4.

650,000 yuan (+38 compared with the same period last year).

95%), deducted non-net profit4.

4.2 billion (+ 45% YoY).

94%), net operating cash flow5.

810,000 yuan (+55 compared with the same period last year).

82%).

Comments: 1. The new and old products are jointly promoted. The company’s single-quarter performance hit a record high, and the growth rate was considerable.

① Benefit from the rise of the old product “Ask Mobile Games” (opened the 3rd anniversary in April 19 / ranked 25th on the iOS sales average, up to 5 / cumulative registered user number exceeds 33 million), and the new product “Greedy Cave 2 and “Across the Star Arcs” and other outstanding performance, 19H1 company’s revenue side and profit side have achieved rapid growth.

② In terms of single quarter results, the company achieved revenues of 18Q3 / 18Q4 / 19Q1 / 19Q2 respectively.

82/4.

95/5.

06/5.

6.5 billion (monetized growth rate of 29% / 2% / 12%), net profit attributable to mothers1.

72/2.

16/2.

13/2.

5.2 billion (26% /-1% / 18% month-on-month growth rates), attributed to the mother deducted non-net profit1.

53/1.

95/2.

0/2.

4.2 billion (QoQ growth of 27% / 3% / 21%).

③ The overall gross profit margin of the 厦门夜网 company in 19H1 was 91.

1%, net interest rate is 56%, period expense ratio is 30.

46%, of which: sales rate is 10.

35% (sales cost 1.

11 ppm / YOY 111%, 19 new online games increased in 19 years, the corresponding promotion increased), management fee rate 6.

79%, R & D expense rate 14.

16% (R & D expenses 1.

52 ppm / YOY 16%, 19H1 increased research and development staff to 323 people), financial rate -0.

85%.

2. The company adheres to the “excellent + differentiated” route, is player-oriented, and its products iterate quickly to gain better user reputation and profitability.

In the future, the company will continue to invest in self-research, build a unique distribution platform (Thunder Games), expand overseas markets, and explore new technologies and new profit models such as 5G / cloud games / AR / VR.

① Research and transport integration: The company’s R & D strength has been enhanced + the product structure has been continuously enriched, and it has blossomed in MMORPG, Roguelike, two-dimensional, independent games and other fields, and established an independent operation platform Thunder Game.

Through the mining and analysis of a large number of Roguelike game player behavior data, the company has accumulated unique experience in this category of game operation. It is expected that this advantage will be extended to more subdivided game types (such as casual, RPG, AVG, placement, Cards, simulated operations, etc.).

Product reserves include “Puppet House Fantasy Night”, “Illona”, “The Guardian of the Force”, “Evolution of Land” (expected to be launched in 19Q3), and so on.② Overseas exploration: In May and July of 19, the company set up subsidiaries in Japan and Hong Kong, China.

Follow-up will continue to expand overseas markets, expand the scale, expand the team, and create a casual + independent features + medium to heavy game product matrix.

At present, it has obtained overseas distribution rights for a variety of products such as “Elona”, “The Blade of the Deep”, “Turmoil”, “The Guardian of the Force”, “Overdungeon”, “The Land of Kings”, and “Ancient War”, Including two dimensions, Roguelike and many other game categories.

③New technology field: The company has accumulated technology in VR / AR technology, 5G network, cloud games and other aspects. It has launched two VR games, Ranger: Lost Tribe and DeadlyHunter, on the Steam platform.

3. Profit forecast and investment grade: We estimate that the company’s net profit attributable to its mother in 2019-2021 will be 8 respectively.

8/9.

9/11.

400 million, corresponding to the current PE is 18/16 / 14X.

The core old products of the company are relatively stable. Small and beautiful new products have been launched one after another to expand their overseas market share. Masterpieces such as “M68” continue to be polished, maintaining the “recommended” level.

Risk reminders: policy risks in the gaming industry, increased competition in the industry, single product dependence risk, old product life cycle is less than expected, new product launch progress and market performance are less than expected, user acquisition costs and IP copyright prices increase, core talent loss, player preferencesChanges, new technology advances less than expected, corporate governance risks, shareholder reduction risks, market style switching, etc.