Sanqi Mutual Entertainment (002555): Systematic traffic pattern for profit recovery to be verified again

Sanqi Mutual Entertainment (002555): Systematic traffic pattern 上海夜网论坛 for profit recovery to be verified again

Event: The company announced the 19-year semi-annual report. The report merged, the company realized revenue, net profit attributable to the mother, and net operating cash flow were 60.

7.1 billion, 10.

3.3 billion, 6.

1.6 billion, an annual increase of 83.

83%, 28.

91%, -36.


Opinion: The reported company achieved revenue of 60.

710,000 yuan, the income structure has changed, mobile games, page games business respectively accounted for 89.

39%, 10.

61%, after the divestment of automotive and related businesses, no longer generate revenue.

The company’s mobile game business achieved revenue 54.

2.7 billion, an increase of 152.

9%, mainly due to the outstanding performance of the new tour “Sword Passed Down” and “Douro Continent”, the report respectively ranked third and thirteenth in the iOS bestseller list, while the old tour “Age of Eternity” and “Angel Sword”Stable contribution, has been on the TOP100 list for a long time.

Company page travel business realized revenue 6.

4.4 billion, down 29.

2%, mainly due to changes in player demand and shift in company strategic focus.

In terms of expense ratio, the current sales expense was 36.

32 trillion, an increase of 217.

63%, mainly for the early promotion of new products; management costs 88.05 million yuan, a decrease of 31.

17%, mainly due to the fact that companies such as Wuhu Shunrong Auto Parts and Wuji Entertainment and Games did not split the scope of consolidation during the reporting period; financial expenses were 4.33 million yuan, a decrease of 68.

95%, mainly due to the decrease in supplementary expenses caused by the decrease in bank borrowings.

In terms of cash flow, the net operating cash flow for the period was 6.

1.6 billion, down 36.

93%, mainly due to: 1) the company and the traffic operator renewed the account period, and according to the financial report, the ending balance of the prepayment increased by 3 from the beginning of the period.

09 billion US dollars, mainly used to prepay the Internet traffic charges; 2) product flow income generally has a payment cycle of several months, according to the financial report shows that the remaining balance of accounts receivables increased by 4 at the beginning of the period.

1.9 billion, mainly from key new tours such as “Sword Passed Down” and “Doulau”.

The semi-annual report updates our perception and judgment of the company: 1) The profit margin has rebounded significantly, and the complete play of “three-dimensional marketing + precision promotion + long-term service” has been verified.

Net profit for the period increased by 3 from Q1.

8pct, which indicates that the early marketing investment has been effectively converted. The games released by Q1 have gradually entered the recovery period, and the sales expenses of Q2 have decreased by 6 compared with the first quarter.

500 million.

2) The success rate of explosive products is high, and the scale effect continues to increase.

Following “One Sword”, the new tour “Elf Grand Ceremony” launched on June 27 reached the 4th bestseller list and is currently stable at TOP10; the “Duro mainland” recently launched at the beginning of the year has reached 9th bestseller list.

3) Accelerate the pace to expand overseas markets and test new categories of water.

According to the semi-annual report, the company ‘s self-developed product “Douloland” topped 10 million in the first month after it was launched in Singapore and other regions; the card game “SNK オ ー ル ス タ ー” topped the GooglePlay game download list after it was launched in Japan; the classic product “EternalThe Era continued to maintain a steady flow in markets in Southeast Asia, Europe, America, Japan and South Korea.

At present, the company has stocked a variety of global and multi-regional products, including self-developed ARPG “Dark Descendants”, “Doulau” international version, simulated business “code DG”, etc., is expected to be launched in the second half of 2019; agent distributionWestern magic SLG “Code MH”, medieval SLG “Marine War”, etc., co-exist strategic investment to expand boutique developers, strengthen the global SLG market layout.

Investment suggestion: The company focuses on the main business and provides a variety of successful product experiences, and gradually actively expands the development and promotion of new products, and gradually deploys overseas operations and industrial upstream and downstream investment businesses.

We estimate the company’s net profit for 2019-2021 will be 19 respectively.5.2 billion, 22.

8.7 billion, 25.

57 trillion, corresponding to EPS are 0.

91 yuan, 1.

06 yuan, 1.

19 yuan, we give 18X estimate in 2020, corresponding to a 6-month target price of 19.

08 yuan, “Buy-A” rating.

Risk warning: The performance of Xinyou exceeds expectations, the degree of industry regulation is lower than expected, and the progress of overseas business development is not as expected.