Sanqi Mutual Entertainment 武汉夜网论坛 (002555): Self-developed new products are gradually entering the good environment, and the purchase volume is expected to help Q2’s profit margins rise.

Company status We recently organized company executives to conduct a reverse roadshow in Shanghai and exchanged company status with investors.

We believe that the company has a long history of R & D and a unique distribution model. Only the city’s share has steadily expanded.

Maintain Outperform rating.

The core points are as follows: Comments enter a strong product cycle and market share is expected to increase steadily.

The research and development of the company’s Aurora Network has experienced many years of precipitation, and this year has entered a strong product cycle.

In the first quarter, high-quality products such as “One Blade” and “Douro Continent” have been launched. The company said that the current “Douro Mainland” is still climbing.

Recently, Miracle Genuine authorized MMO mobile game “Fairy Grand Ceremony” has been launched on the iOS channel and the purchase channel. This product is endorsed by Dawn. According to the Android reservation information, it is expected to be launched on the Android App Store channel on July 10.

We believe that the company is in a strong product cycle. It is expected that in the second quarter of 19, it will achieve a monthly mobile game of US $ 3 billion to 3.3 billion.Travel market share of 8-10% target, which will steadily rank third among domestic mobile game companies.

Issue-side purchase prices continued to stabilize.

The relationship between flow operations (“buy volume”) and profit margins is a key concern for investors.

The company said that since 2018, the purchase price has stabilized due to shrinking version numbers / low-quality products exiting the purchase market / reduction in new Internet apps.

The company’s profit margin is related to the rhythm of the promotion of new games. Considering that the company will launch a heavy product in 2Q19, we expect the profit margin to rebound in 2Q19, but with the expansion of the “Elven Festival” in 3Q19, the profit margin may fall.

We believe that from a long-term perspective, traffic operations are a sustainable distribution model. At the same time, it can help companies accumulate experience in channels, values, and other specific product categories, and continuously accumulate the ability to strengthen research and development and release the category.

Customized products expand overseas and enter the Japanese market.

The company stated that in terms of overseas distribution business, in addition to a number of mature Southeast Asian markets, it has begun to issue customized products developed for the local market in the Japanese market. At present, the monthly sales in the Japanese market have accounted for about 50% of overseas sales.progress.

We believe that overseas mobile games are expected to reach a KPI of 2.5 billion, providing supplements outside the domestic market.

Estimates suggest that we maintain our 2019-2020 profit forecast. The company currently expects to correspond to 2019/2014.


2 times price-earnings ratio.

We maintain our Outperform rating and 18.

4 yuan target price, corresponding to 18,2019.

5 times price-earnings ratio, compared with 30 previously included.

40% upside.

The risk advertising costs remain high, the life cycle of existing games is shorter than expected, and the progress of new product launches is gradually expected.