Perfect World (002624): Steady growth of non-net profit and improvement in cash flow. Significantly look forward to Q4 new product launch.
The main points of the report describe the company’s third quarter report for 2019. In the first three quarters of 2019, the company achieved operating income of 58.
1.2 billion, an annual increase of 5.
43%, net profit attributable to mother 14.
7.6 billion yuan, an increase of 12% 佛山桑拿网 year-on-year, and net profit of non-attributed mothers14.
2 billion, an annual increase of 28.
Incident Review The company’s third-quarter results are in line with expectations, and cash flow has improved significantly. New games have driven Q3 revenue to increase sequentially. The decrease in Q3’s single-quarter net profit was due to the distribution of disposal benefits in the same period last year. The deduction of non-net profit can better reflect the overall situation of the company.
1) The company’s first three quarters of 2019’s results are in line with the capital market forecast. Q3’s single-quarter net profit has gradually decreased and the 18Q3 company has disposed of part of the equity of Zulong Technology, a joint venture, and confirmed non-recurring profit and loss1.
US $ 100 million. There was no such large non-recurring income in 19Q3, which resulted in the replacement of net profit attributable to the mother in 19Q3. 2) The company’s net operating cash flow in the first three quarters.
1.7 billion, an improvement over the past, of which Q3 net operating cash flow in a single quarter6.
5 billion, higher than net profit, mainly due to core game payments and film and television expansion and replacement.
”Perfect World” currently has stable running water. The new products “The Condor Heroes 2” and “Four Seasons Songs in Cloud Dreams” have performed well, prompting the company to increase its non-net profit significantly, and optimistic about the “My Origin” that will be launched in Q4.”Dream Collection Cygnus”, “Swordsman” and so on.
1) The “Perfect World” mobile game was officially launched in March. At present, the monthly flow is estimated to be about 200-300 million. Q1-Q3 deducted non-net profit increased by 28.
47%, mainly benefiting from new games such as “Perfect World”, “Grand Condor 2” and “Four Seasons Songs in Cloud Dreams”; 2) Products that may be launched on the company Q4 include: “My Origins” (fixed November 15th) (Day), “Dream Collection Cygnus” (opened in September), “Xiao Xiao Ao Jiang Hu” (obtained version number on October 23).
Looking at 5G for a long time will catalyze the development of cloud games and VR / AR games. Toutiao, iQiyi actively participates in the game distribution market. The company’s research and development-based approach will benefit the industry’s development trend for a long time.
1) Driven by 5G, the rise of cloud gaming platforms will definitely benefit console game vendors first, and Perfect World is the only console game vendor in the stock market, which will benefit from the rise of cloud gaming.
2) Toutiao, iQiyi has successively participated in the game publishing business and competed with Tencent. It may increase the segmentation ratio of developers in the future. The company has the advantage in content developers and will supplement the R & D team in 2018. The advantages of gradually expanding will be further highlighted.
The company’s heavy game products are coming online one after another. We believe that it will enter a high growth channel in 2019. It is predicted that the company’s net profit attributable to mothers in 2019-2021 will be 20 respectively.
4.9 billion, 22.
85 billion, 25.
1.3 billion, corresponding to PE of 18.
02 times, 16.
16 times, 14.
70 times, give “Buy” rating.
Risk Warning: 1.
Growth in the gaming industry 2.
The company’s new products were postponed.