Perfect World (002624) 2018 Annual Report Review: Perfect World Mobile Games Performance Exceeds Expectations, Good Works in 2019 Gathering, Bringing Increment in Performance

Perfect World (002624) 2018 Annual Report Review: Perfect World Mobile Games Performance Exceeds Expectations, Good Works in 2019 Gathering, Bringing Increment in Performance

[Investment Highlights]Perfect World releases 2018 annual report and 2019 first quarter report.

In 2018, the company achieved revenue of 80.

34 billion, a year-on-year increase of +1.

31%, excluding YOY + 6 of income from cinema business.

21%; net profit attributable to mother 17.

0.6 billion, a year-on-year increase of +13.

38%; net profit attributable to non-mothers 14.

47 billion, a year-on-year increase of +3.

54%.

In the first quarter of 2019, the company achieved revenue of 20.

41 billion, a year-on-year increase of +13.

26%, excluding YOY + 32 from the impact of cinema business.

80%; net profit attributable to mother 4.

86 billion, a year-on-year increase of +34.

95%; deduct non-attributed net profit 4.

63 billion, a year-on-year increase of +56.

77%.

In 2018, the company’s operating costs were YOY + 4.

99% reached 35.

4.9 billion, of which the film and television business cost YOY + 25.

52% reached 17.

3.7 billion, mainly due to the obvious increase in TV drama production costs, while the game business costs YOY-9.

24% to 18.

1.3 billion, of which mobile gaming costs fell by 2.

60 billion; selling expenses YOY + 18.

41% reached 8.

8 billion, mainly due to the increase in marketing costs for new games; management costs YOY-7.

53% to 7.

0.4 billion; R & D expenses YOY + 7.

76% reached 14.

13 billion.

FY19Q1, company operating cost YOY + 0.

81% reached 14.

9.9 billion, selling expenses YOY + 10.

15% reached 1.

84 billion, management costs YOY-10.

16% reached 1.

5.5 billion, research and development costs YOY + 20.57% reached 4.

5.7 billion, the expense growth rate is lower than the income growth rate.

Classic terminal games have a stable performance, and mobile games in 2019 have gathered.

Revenue from gaming business in FY201854.

21 trillion, divisor 4.

06%.

End game income YOY + 10.

28% reached 21.

9.6 billion, the classic works “Xianxian”, “Perfect World International Edition” contributed stable income; affected by factors such as version number, the company’s mobile income YOY-11.

94% to 27.

1.1 billion; the performance of console games is average, with revenue of YOY-10.

99% reached 4.

63 billion

The final version number of 2018 was released. On March 6, 2019, “Perfect World” mobile game was launched. In the first month of release, the game surpassed “Glory of Kings” half the time and ranked first on the iOS bestseller list. It was still selling well on April 30th.In the top three of the list (behind “Glory of the King” and “Yin Yang Shi”), about 1 billion in the first month was better than expected.

In addition, Perfect World has rich reserves in mobile games, such as “The Condor Heroes 2”, “Four Seasons Songs in Cloud Dreams”, “Dream Collection Cygnus”, “Xiao Xiao Ao Jiang Hu”, “My Origins”, etc.It covers MMORPG, two-dimensional, sandbox, SLG, ARPG, open world and many other types and alternative games.

According to the App Store, Tencent’s perfectly developed “Four Seasons Songs” may be launched on May 21.

After the cold winter of 2018, the masterpieces gathered in 2019 will provide greater 北京桑拿洗浴保健 flexibility for mobile games.

The theater was replaced, and the TV series performed well.

In FY18, the company’s film and television business revenue increased by 14 year-on-year.

62% reached 26.

13 billion.

TV series earns YOY + 55.

01% reached 17.

4.8 billion, “Blade Attack”, “Scorching Fire”, “Summer This Summer”, “Return”, “The Most Beautiful Youth”, “Sweet Honey Ashes”, “Motherhood”, “GirlThe TV series such as “The Flower Never Give Up” have been widely recognized by the market, and the film and television works such as “The New Youth” and “July and Ansheng” also contributed to good performance in 2018.There are also plans to release more than 30 works, the company’s inventory (mainly film and television works) YOY + 36 at the end of FY18.

13% reached 21.

42 billion.

Cinema line business YOY-39.

87% reached 5.

06 billion, beyond stripping.

[Investment suggestion]Perfect World is a multi-industry entertainment complex with effective corporate governance and financial health.

We raised our 2018 profit forecast based on the company ‘s financial report. As the company ‘s “Perfect World” mobile game performed better than expected, we raised our FY19 / FY20 profit forecast and made a profit forecast on FY21.

We expect operating income of 19/20/21 to be 92.

96/106.

43/122.

9.6 billion yuan, net profit attributable to mother 20.

78/23.

70/26.

0.94 million yuan, corresponding to 17.

89/15.

68/13.
79 times PE, maintaining the “overweight” rating.
[Risk Tips]The key game does not get a version number, the game’s online progress is less than expected, and the flow is less than expected; the film and television works are not as expected, the key person risk, and the policy risk.