Chinese Media (600373): In 19 years, several masterpieces have been launched and old product performance support is still expected to improve

Chinese Media (600373): In 19 years, several masterpieces have been launched and old product performance support is still expected to improve

Event: The company announced the main operating data for 2018,[publishing business]with a sales code of RMB 6 billion (YOY0).

89%), revenue 28.

6.8 billion (YOY-1.

5%), gross margin of 19.

66% (+0.

03pct);[Issue Business]Sales Code Ocean 45.

3.3 billion yuan (5 years ago).

52%), revenue 41.

4.2 billion (year-on-year)

96%), gross profit margin 37.

59% (+0.

27 points);[Game business]Revenue 31.

1.7 billion (YOY-21.

09%), gross margin of 63.

10% (-1.


Opinions: 1. The overall operation of the company is in line with expectations, and the publishing and distribution business has maintained steady development.

The overall operation of the publishing segment was stable, with sales of foreign sales continuing to increase, and gross profit margins rising slightly; the total revenue of the publishing and distribution business was 70.

10,000 yuan (3 compared with the same period last year.

9%), of which: the publishing business achieved revenue of 28.

6.8 billion (YOY-1.

5%), gross margin of 19.

66% (+0.

03pct), the revenue from the issuance business was 41.

4.2 billion (year-on-year)

96%), gross profit margin 37.

59% (+0.


2. The game went to sea. In 18 years, it was less affected by domestic policies and supported by the performance of old products, which caused concern about the progress of new products and the market performance in 19 years.

Self-developed old products: The core products “COK”, “AOWE”, “COQ”, and “AOK” have entered a mature period, and profits have been released.

The total number of registered users of “COK” at the end of the month was 18Q1 / Q2 / Q3 / Q4.




2.8 billion households, with an estimated number of users of 27.



320,000 households with monthly running water of 1.



6 billion, the attenuation rate of flowing water has improved.

At the same time, the growth rates of the promotion fees were 15-18 years, and the promotion fee rates were 43.

46% / 32.

26% / 17.

39% / 8.


“COK” enters its fifth year. In the future, it will continue to focus on key players and maintain long-term boutique operations.

Acting for old products: The key products “Wonder Miracle” and “MR” maintain better performance.

“Miracle Warmth” Since its launch in April 17 (Global countries and regions except Asia), it has entered the top 10 best-selling iOS iOS in the United States, with tens of millions of sales. It is the 60th anniversary of Barbie. The US service version will launch cooperation with Barbieseries.

New product reserves: ① “COD” (Self-developed SLG / Activision Blizzard Classic IP) is about to undergo a second round of testing, and a round of testing has been conducted in Australia / Malaysia / Singapore / Philippines at the end of each year;(Single generation / except mainland China, Hong Kong, Macao and Taiwan, other areas in Japan and South Korea), is expected to be launched in 19Q2; ③ “Total War: Return of the King” 杭州夜网论坛 (self-developed), research and development polishing, is expected to launch in the second half of 19

Other layouts: release sports, 2D, WeChat mini games, etc.

3. The company intends to repurchase shares through a centralized bidding transaction, demonstrating its confidence in the company’s continued and stable development and recognition of its value.

The repurchase amount is not less than 1.

5 trillion and not more than 6 trillion, the repurchase price does not exceed 15 yuan / share.

As of February 1, 19, 78 had been repurchased.

780,000 shares, trading price 12.


00 yuan / share, the total amount paid is 10.02 million yuan.

4. Profit forecast and investment grade: underestimation of game sector + good cash flow + marginal improvement + 5G application / cloud game theme catalyst, the company’s publishing business is stable + game business elasticity.

We estimate that the company’s net profit attributable to its parent for 2018-2020 will be 16 respectively.



5.1 billion, corresponding to the current PE of 14/13 / 11X, maintaining the “recommended” level.

Risk warning: game industry policy risks; intensified overseas competition; product launch progress and market performance are less than expected; user acquisition costs and IP copyright prices further increase; changes in player choices; company risks; risk of holdings; market style conversion, etc.