Youzu Network (002174) Quarterly Comment: Q3 Endogenous Significantly Improves the Next Dividend Proportion Increases the Underestimated Variety

Youzu Network (002174) Quarterly Comment: Q3 Endogenous Significantly Improves the Next Dividend Proportion Increases the Underestimated Variety

Event: The company released three quarterly reports on the evening of October 22: the company achieved revenue of 26 in the first three quarters of 19 years.

42 billion, an increase of 0.

73%; realized net profit attributable to mother 7.

0.5 billion (previous notice is 7?
800 million, falling close to the lower limit), the same increase of 3.

29%; Realize net profit deduction 6

1.7 billion, an increase of 10.


After the split, 19Q3 achieved revenue of 9.

1.2 billion, an increase of 9.

11%, the ring increased by 1.

70%, net profit attributable to mother 2.

9.8 billion, up 57.

11%, a ring increase of 27.

28%, net of non-attributed net profit3.

1.0 billion, an increase of 70.

08%, an increase of 107.


The main changes in performance are: 1) “Quanyou” went live on July 10th, although the current performance was slightly lower than the previous expectations, but it still led to the 19Q3 performance repair; 2) “Saint Seiya” was launched overseas, and overseas distribution revenue since SeptemberThere has been growth, and the ranking of overseas publishers has increased from the previous 20 to 16; 3) The scope of the consolidated financial statements of Youzu in 19Q3 has changed significantly, and Palm Amoy will no longer be consolidated, which will affect the income and profit of the third quarter;) 19Q3 investment net income was 189.

740,000, net income from changes in fair value was 4226.


Cost analysis: The increase in gross profit margin and net profit margin in 19Q3 was mainly due to the higher gross profit margin of Quanyou enjoyed direct breakdown.

19Q3 company gross profit margin 55.

49%, an increase of 5 per year.

64%; net interest rate 32.

68%, an increase of 10 per year.


Expense analysis: Expense rate exceeded and decreased month-on-year, four expenses in 19Q327.

20%, a decline of 5 per year.

78pcts, down 12 from the previous month.


After the convertible bonds were received, the quality of the balance sheet improved.

September 23, 2019 Youzu issued a face value summary11.

500 million, with a term of 6 years, initially converted to 17.

The 06 yuan convertible bond is mainly used for online game development and operation construction projects, online game operation platform upgrade construction projects and supplementary liquidity. The third quarterly report shows the company: 1) Monetary funds increased by 8.

56 ppm; 2) Repayment of short-term borrowings 2.

2.2 billion; 3) 佛山桑拿网 Increase in prepayments by 1.
US $ 6.9 billion is estimated to be due to the advertising of products ready to go online and new royalties (such as agency products).

The company actively grasps the trend of the cloud game industry.
In addition to the Cloud Game Industry Alliance (CGIA) discussing cutting-edge technologies, Securities Times reported on November 7 that Youzu Network and Huawei signed a cooperation framework agreement. The two parties will work together to develop cloud game cooperation and jointly develop the cloud game industry market.

Subsequent parties will jointly promote cloud gaming solutions and release cloud gaming products, including ARM Android cloud games and PC cloud games.

Investment point of view: The company’s three quarterly report is approaching the lower limit of the previous notice, but it has improved in the single quarter. Follow-up “Shanhai Mirror Flower” (expected to be launched at the end of November), “Three Kingdoms of the Youth 2” (waiting for version number), “Wild Wild Fighting” (endOr on-line early next year) and other head product performance can be expected.

Combined with the three quarterly reports, we lowered the company’s 19-year profit forecast. It is estimated that the net profit for 2019-2021 will be 1.1 / 14 / 1.7 billion yuan, corresponding to the estimated 12x / 9x / 8x. Then we will continue to observe the game launch and investment income.The annual profit is about 900 million, with an annual increase of over 20%.

In addition, director Zheng Jiayao reduced the dividend payout ratio from 10% to no less than 30%. Next year’s annual report dividend ratio is expected to increase, and the situation of capital of major shareholders continues to improve. The pledge rate is expected to continue to decline. The company is also reviewing and adjusting.

Once again, we are optimistic about the long-term development space of the game industry after 5G commercial implementation, and it is recommended to pay attention to underestimation and repair.

Risk Warning: The game version cannot be released in time due to the release of the version number in a timely manner. The performance of the online game is gradually expected, the number of page games is shrinking, overseas promotion is blocked, and industry supervision is tightened.