Century Huatong (002602) company comment: continue to deepen cooperation with core shareholder Tencent and actively focus on landing

Century Huatong (002602) company comment: continue to deepen cooperation with core shareholder Tencent and actively focus on landing

Event: Shengyue Networks, a wholly-owned subsidiary of Century Huatong, and Tencent signed the “Business Cooperation 北京夜生活网 Agreement” in Shenzhen on November 29, renewing the original business cooperation agreement (extended on January 16, 2018), and further leveraged the resources of both parties in their respective fieldsAdvantage, in-depth business cooperation in the field of digital interactive entertainment.

  As the company’s core shareholder, Tencent will maintain close cooperation and resource sharing with the company.

Tencent currently holds Century Huatong 4.

96% of the shares rank among the top ten shareholders of the company.

Tencent is both the company’s shareholder and the company’s important media resource purchaser. This agreement proves that the two parties will further deepen resources and platform cooperation and sharing in the future. Tencent further locks the company’s exclusive preferential cooperation rights for high-quality game content (the company has never had a new game in mainland China).And exclusive preferential cooperation rights in the distribution and operation of certain designated overseas regions), optimistic about the company’s research and development capabilities, and the company will continue to maintain close cooperation with Tencent in terms of game IP reserves and overseas distribution.

  Shengqu R & D + Tencent’s unique historical achievements: “Legend of Blood” launched in Q3 in 2015, “Dragon Valley Mobile Games” and “Legendary World” launched in Q1 2017, and “Legendary World 3D” launched in Q4 2018″.
Among them, “Dragon Valley” has more than 1 billion running water in the first month, and Tencent’s exclusive agent sequel “Dragon Valley 2” is waiting for the version number to land. It is expected to be officially launched in 20Q1. We expect that the company will have at least 3 self-developed products in 20 years.Launched exclusively by Tencent.

  The recent ownership of the “Legend” copyright is further clear, and the company is expected to deepen its development in the “Legend” category.

  On November 28, the company announced that it had received a judgment from the Wuhu Intermediate People’s Court of Anhui Province. In Korea Entertainment Virtue, the company accused the mobile game “Dragon Breaking Dawn” authorized by the company’s affiliated Sheng game “Legend World” to be infringed on copyright.In the case, the entertainment virtue company’s claim was completely rejected by the court according to law, and the court further clearly determined that the third party carried out the adaptation, development, and operation without any explicit or implicit permission and consent of the third party.

  On October 14, the company announced that it had received a judgment from the South Korean court. The “Judgment” rejected all claims of entertainment virtues and Korean legendary companies, and Shengqu Games and its affiliates continued to use the “legendary” copyright agreement.

The agreement stipulates that Shengqu has exclusive rights to the “Legend” game in Mainland China.

  Investment perspective: The strategic cooperation agreement announced this time is a framework agreement. In the future, specific implementation content, operational details, segmentation ratios, etc. will reach supplementary specific contracts, and the specific implementation of subsequent agreements will help the company to further expand and enhance its business.Will have a positive impact on the company’s development.

The company is expected to strengthen cooperation with Tencent, achieve win-win and mutual benefit, and rely on Tencent’s further stable market development leader position. 20Q1 company’s self-developed game + Tencent’s unique “Dragon Valley 2” performance is expected, and it is recommended to pay attention to the company’s equity structure to promote continuedoptimization.
We estimate that the company’s net 杭州夜网论坛 profit attributable to its parent for the year 19-21 will be 30.


2/50 billion, an increase of 214% (not readjusted) / 33% / 24%, corresponding to an estimated 19x / 15x / 12x, as one of the leading players in the game industry globally, we give the company a 20X target estimate for 20With a target price of 13.

4 yuan, maintain “Buy” rating.

  Risk reminder: The version number is not approved in time, the online time or game performance exceeds expectations, overseas promotion is blocked, the governance structure is improved, and industry supervision is tightened.