Youzu Network (002174): The performance is in line with the expected S-class product landing expectations, verify the company’s R & D strength improvement

Youzu Network (002174): The performance is in line with the expected S-class product landing expectations, verify the company’s R & D strength improvement

Event: The company announced the 18-year annual report, the number of reports, the company’s realized revenue, net profit attributable to the mother, and the net operating cash flow were 35.

8.1 billion, 10.

09 billion, 2.

7.3 billion, an increase of 10 each year.

68%, 53.

85%, -63.

14%; realized earnings per share of 1.

At 15 yuan, the company plans not to distribute cash dividends, not to pay bonus shares, and not to use public reserve funds to increase its share capital.

The company announced a quarterly report for the year of 19, the number of reports, the company’s realized revenue, net profit attributable to the mother, and net operating cash flow were 8, respectively.

33 billion, 1.

73 ppm, 68.6 million yuan, an increase of -4 each year.

03%, -22.

20%, 36.


Opinion: The company’s revenue structure has remained stable for 18 years, with web games and mobile games accounting for 24 respectively.

96%, 71.

70%, domestic and overseas regions accounted for 48 respectively.

51%, 51.

49%, of which the share of revenue in overseas regions decreased slightly, mainly due to the company’s key products “Angel Era”, “Goddess Alliance” and other overseas launch time in the second half of 18 years, the relative contribution of the revenue decreased relatively.

In the first quarter of 19, the company’s net profit increased to a certain extent. The results of our analysis are: 1) the company’s new online product replacement in the first quarter, while the old game stream slightly reduced; 2) asset impairment losses, management costs, taxes and other expensesIncreased.

On the whole, we judge that the weak performance in the first quarter is mainly due to quarterly factors.

In terms of profit margin, the company’s gross profit margin steadily increased in 18 years.

03pct to 56.

06%, mainly because the company’s self-developed game projects increased in scale, compared with the agency operating business, the profit margin is higher.

In terms of cash flow, the main categories of the company’s net operating cash flow for the past 18 years are relatively weak: 1) the change in channel structure has led to a longer repayment period; 2) the initial cost of IP costs and research and development costs is relatively large.

In the first quarter of 19, the company’s operating cash flow improved, mainly due to the company’s increased efforts to control the speed of repayment.

The annual report and the first quarter report strengthened our understanding and judgment of the company: 1) Strengthening R & D capabilities and improving R & D efficiency.

In 18 years, the 夜来香体验网 company’s R & D staff has stabilized at nearly 1,500 (76%).

49%), R & D investment amount 4.

9.4 billion (same increase of 53.


At the same time, the company centralized the common attributes to the same management platform in China and Taiwan, simplified the internal structure, enhanced the professionalism of vertical fields, strengthened the control of R & D quality, and gradually transformed it into a “smart growth” strategy; 2) Adhere to the global research and transportation integration strategy.
In 18 years, the company’s overseas distribution has expanded to more than 200 countries and regions around the world. It has established a Singapore R & D center and established branches in India, Turkey, South Korea, and Thailand.

In 19, the company plans to release new tours overseas, including self-developed “Yuanyou Page Tour”, acting “Saint Seiya”, “Soul Hunting Awakening”, “The Night of the Gods”, and will also publish supercell “Wild Rush” in China.
A number of key products are expected to come online in 19 years, focusing on the dual role of the company’s performance contribution and estimated improvement.

1) The company ‘s new SLG game “Game of Thrones: Winter is Coming” (Tencent’s exclusive agent) has recently started to distribute test accounts. It is expected that the test will begin for three weeks after May 1st.

At present, “Game of Thrones Season Eight” is being released simultaneously in the world. Tencent Video is the sole broadcaster in China, and the playback volume has reached 1.

600 million times, we expect that with the advance of the plot, the number of reserved players will continue to increase.2) In addition to the traditional SLG / MMO / card and other traditional categories, the company focuses on the two-dimensional category, the new tour “Shanhai Mirror Flower” (under development) was awarded TapTap 8.

A 7-point high-score evaluation, and received more than 100,000 appointments during the small-scale assessment of 500 Air Force personnel, with explosive potential.

3) The company’s reserve products include highly popular IP adaptations such as “Three Kingdoms 2” and “Tomb Raider Mobile Games”, which aim to provide a good foundation for the company’s future long-term development potential.

On the whole, the company has obtained in-depth layout from multiple dimensions such as IP acquisition, research and development strength, and integrated operations in the past three years. It is gradually completing the transition from a traditional page game developer to a boutique mobile game developer, and has gradually started a new round of growth cycle.

Investment suggestion: The company will focus on three main lines of high-quality, large-scale, and large-scale IP, and will develop in three years. With the implementation of S-level products one by one, the company’s R & D strength of high-quality games is expected to be verified, and the company’s internal strategic focus will rise to the next level.

It is expected that the company’s net profit for 2019-2021 will be 12 respectively.

10 billion, 14.

3.3 billion, 16.

710,000 yuan, corresponding to EPS 1.

35 yuan, 1.

61 yuan, 1.

88 yuan.

We give a 20x target PE in 2019, corresponding to a target price of 27 yuan, and maintain a “Buy-A” rating.

Risk warning: The pace of new games going online is lower than expected, the supervision of the gaming industry is becoming severe, the revenue from overseas business expansion is not up to expectations, and accounting policies are changing.