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Perfect World (002624): 19-year growth expectation of neutral performance

Perfect World (002624): 19-year growth expectation of neutral performance

Investment Overview Perfect World is a company that is a domestic engineer in film and television creation and game development and operation. It has strong game development and film and television production capabilities. It also has a small number of games and game and film business.

Assume that the target city’s earnings ratio in 2019 is 23 times, and the target price is 34.

25 yuan, down 9 earlier.

1%. Considering the recent budget adjustment, we upgrade to “Buy” rating, with potential growth of 34.


(Current price as of March 13) Results Update The Group announced its 2018 annual results and 2019 first quarter results.

Group revenue in 2018 was 80.

3.4 billion yuan, a slight increase every year1.


Among them, the game business revenue slightly fell 4%, about 54.

200 million yuan, we believe the retrogression is related to the suspension of the 2018 game version number.

Film and television business revenue was 14.

6% growth to 26.

1 billion yuan.

Initially, the gross profit margin was 57.

4% dropped to 55.


Net profit attributable to mother 17.

1 billion yuan, an increase of 13 in ten years.


  Operating revenue for the first quarter of 2019 reached 20.

400 million yuan, an increase of 13.

3%; net profit attributable to mother is 4.

900 million yuan, a substantial increase of 35% throughout the year.

Gross profit margin reached 68.

1%, an increase of 6 per year.


  Business Status In terms of end-games, the Group’s classic end-games “Xianxian” and “Perfect World International Edition” continue to bring stable revenue.

  In one game, the group launched a terminal game and console dual-platform game “Subnautica” (Subnautica), which is a submarine survival game, similar to “Minecraft”.

At present, “Deep” has received a 94% positive rate on the game platform Steam, and the game rating website IGN has also scored as high as 9.

1 point, widely welcomed by players.

In addition, the group is also developing the masterpiece of the new game “New World of Fairy Tale”, “Perfect World” console version and the dual platform game “DON’T EVEN THINK”, “Torchlight II”, “Magic The Gathering”,Will bring new impetus to the gaming business.

  In terms of mobile games, the mobile game products launched in 2018 performed well, such as “Samsara”, “Songs of Fire” and “Wulin Waichuan Mobile Games”.

In addition, in 2019, the “Perfect World” mobile game developed by the group was officially launched with great results. The number of new users in the first 12 hours exceeded 2.6 million. It reached the top of the iOS free list on the first day, and also obtained iOS four days after the launch Free list, best seller list double list.

According to Qimai data forecast, as of June 18, the cumulative download volume in the Android system has reached 18 million times.

In addition, according to the statistics of Gamma data, “Perfect World” mobile game ranked third in revenue in May, after “Glory of the King” and “Peace Elite”.

The group will also launch mobile games such as “The Condor Heroes 2”, “The New Demon Continent”, “Xiao Xiao Ao Jiang Hu” and “My Origins”.

As the game version number ceased to be approved in 2018, the Group’s game revenue has fallen back, but with the 2019 version number re-approval, we believe that the growth rate of game revenue will resume.  The Group’s TV drama revenue broke out in 2018, increasing by 55% every year.

During the year, the group launched excellent TV series such as “Blade Attack”, “Scorching Fire”, “Suddenly This Summer”, “Returning Home”, “Going Out of Fire”, “Sweet Honey and Ember Frost”, etc., with good results.

Among them, “Flame as a Song” became the third highest number of online dramas in 2018, with more than 8 billion times; “Go Back” has hit 10 billion hits on the Internet; “Sweet Honey is Embarrassed by Frost”.The number of broadcasts ranked first, and the number of webcasts exceeded 15 billion, winning the Niu Er Award, the annual Weibo drama series, and the most valuable drama series of Yien.

In the first quarter of 2019, works such as “Youth Fight” and “While We Are Young” have been produced. I believe that this year’s film and television revenue will rise steadily.

  It is estimated that based on the worse-than-expected growth of the gaming business revenue in 2018, we have lowered our forecasted revenue for 2019 by 7.

1%, but gradually clear through the game industry policy, coupled with the Group ‘s latest mobile game works are very popular, we believe that the Group’s game revenue will resume its ascension in 2019.

Assume that the target city’s earnings ratio in 2019 is 23 times, and the target price is 34.

25 yuan, down 9 earlier.


In anticipation of recent budget growth, we upgrade to a “Buy” rating with potential growth potential of 34.


  Risk Warning 1.

Mobile game growth exceeded expectations2.

Giants entered the film and television production market 3.

Production team brain drain