Perfect World's first quarter profit of 840 million yuan increased by 81% year-on-year

Sanyan Finance April 26 news, April 25, Perfect World Co., Ltd. (hereinafter referred to as "Perfect World" or "the Company", stock code: 002624. SZ) publishes its 2021 Annual Report, first quarterly report 2022 and Perfect World Sustainability Report 2021.

Looking back at 2021, Perfect World was affected by the market environment outside the market environment, and internally faced a critical period of game business strategy upgrading and product innovation iteration, due to the connection between new and old games, increased investment in research and development, and the decline in the operating profit of the invested enterprises, the annual performance was under pressure in stages, achieving operating income of 8.518 billion yuan and net profit attributable to the mother of 369 million yuan. However, with the gradual implementation of innovation and transformation and upgrading, Perfect World's performance has rebounded.

In the first quarter of 2022, Perfect World achieved operating income of 2.128 billion yuan and net profit attributable to the mother of 840 million yuan, an increase of 81% year-on-year, of which the game business achieved a net profit of 864 million yuan, up 102% year-on-year. At the end of 2021, Perfect World sold its U.S. R&D studio and related local distribution teams in Europe and the United States, and the transaction was completed in the first quarter. After deducting the impact and other non-recurring items related to the game business, the game business achieved revenue of 1.973 billion yuan and net profit of 446 million yuan, an increase of 23% and 35% year-on-year, respectively, showing the effectiveness of innovation and upgrading and strong operating growth momentum.

According to the dividend distribution plan disclosed in the annual report, in 2021, the company intends to distribute 12 yuan (including tax) to all shareholders for every 10 shares, send 0 bonus shares (including tax), and not use the provident fund to increase the share capital.

Game business innovation and upgrading The game goes to sea to shift gears

With the maturity of the domestic digital culture entertainment industry and the upgrading and change of content consumption demand, the game market is increasingly focusing on high-quality long-term development and operation. Since 2021, Perfect World has based on its technical and content advantages in the game business, innovated and upgraded, and focused on the two core tracks of "MMO+" and "Card +".

On the one hand, we will strengthen the advantages of classic categories and consolidate the basic disk of game business, on the other hand, we will increase the investment in research and development of innovative trend categories, and the number and investment in games under development will increase significantly compared with previous years. At the same time, in order to better motivate the core R&D team, the company introduced a series of supporting mechanisms to encourage innovation, such as adjusting the salary policy during the reporting period. In 2021, Perfect World's R&D expenditure was about 2.211 billion yuan, an increase of about 39% year-on-year.

In terms of classic terminal games, in 2021, "Xue Xian" and "Perfect World International Edition" continued to contribute stable income, and "Jie Xian World", "Perfect New World", "Have a Nice Death" and so on are actively promoting; in terms of mobile games, in June 2021, the "Dream New Jie Xian" mobile game was launched, with a cumulative flow of nearly 1.6 billion yuan that year, realizing the iterative upgrade of classic IP in the turn-based track.

At the end of 2021, the multi-person open world mobile game "Magic Tower" with two-dimensional tone, is one of the representative works of Perfect World's diversified integration in the trend category, and after the launch, it has achieved the good results of more than 10 million new users in the first month and nearly 500 million yuan in the first month, and the inheritance and reuse of relevant experience has laid a solid foundation for the further transformation and upgrading of the game business in the future. On the day of April 25th, "Magic Tower" opened a new version of 2.0 "Vera Time and Space", and the game content and quality were upgraded again, which was fully recognized by new and old players.

Since 2021, Perfect World Games has reached strategic cooperation with a number of well-known animation, manga and game IP, fully considering the diversified content needs of Generation Z users and keeping up with market trends. At present, mobile game reserve products include "Black Cat Strange News Society", "Tianlong Eight Parts 2", "The Kingdom of Dynasty and Night", "One Punch Superman: The World", "Million Arthur King", "Immortal 2", "Perfect New World", "Demon Continent 2", etc., and the game development work of well-known IP such as The Spirit Cage and the Fengshen Series is also actively in preparation. The easy vertical version of the 3D mobile game "Perfect World: Battle of the Gods" has been officially launched at the beginning of this year, and continues to upgrade the player's gaming experience.

When the results of game product innovation iteration gradually landed, Perfect World also relied on high-quality games that are more suitable for global distribution to make games go global. In 2021, Perfect World is conducting a comprehensive review and in-depth adjustment of its overseas business. After the completion of the adjustment, the company's overseas business layout is clearer, the overseas R & D team is more refined, and the future will further focus on the dual dimension of "domestic products going overseas + overseas localization development".

On March 17 this year, the "Dream New Immortal" mobile game was launched in the overseas market synchronously, and the "Magic Tower" mobile game has recently opened tests in many overseas places, and it is expected to be officially launched in the overseas market within this year. With the launch of more game products based on global publishing categories in the future, the game is expected to promote the steady growth of the company's performance.

E-sports, platforms bravely take the lead In the film and television business steady focus

Building a diversified and integrated business system is an important development strategy that Perfect World has always adhered to. In terms of e-sports business, with the global e-sports masterpieces Dota2 and CS:GO, Perfect World preemptively laid out the e-sports industry, solidly operated the localization operation in the Chinese market, created a top e-sports event with a multi-layer system, and continued to exert its professional influence in the field of e-sports.

In 2021, 8 events, including DOTA2, became the official e-sports competition project of the 2022 Hangzhou Asian Games, which is an important milestone in the history of global e-sports and China's e-sports development.

Perfect World seizes the historical opportunity to comprehensively deepen the layout of the e-sports industry from the aspects of e-sports product operation, event system construction, and talent training. On the one hand, we use technological innovation to upgrade the e-sports experience, combined with new technologies such as AR/VR to create a new e-sports experience model; on the other hand, through e-sports content innovation and technical cooperation, improve the e-sports ecological industry chain and achieve win-win cooperation.

In addition, in terms of digital platforms, Perfect World has reached a strategic cooperation with Valve in the United States, and the steam platform jointly established will be launched in 2021, and the platform operation work is currently advancing in an orderly manner.

In terms of film and television business, in recent years, driven by multiple factors such as policy supervision and content consumption upgrades, the industry has experienced a round of supply-side reform, and the industry concentration and boutique trend have been increasingly strengthened. Based on the insight of the market and the understanding of user content needs, Perfect World adheres to the principle of prudence and adopts a more focused investment strategy to achieve the steady development of the film and television business.

In 2021, Perfect World's film and television works cover diverse themes such as youth, urbanity, reality, revolution, and military service, and launch a number of high-quality works with valuable connotations with high standards of high-quality production standards. Among them, "Glory and Dreams", broadcast in May 2021, depicts the glorious history from the founding of the Communist Party of China to the victory of the War to Resist US Aggression and Aid Korea in an all-round and whole process, and makes innovative practical explorations on the artistic presentation and poetic expression of major revolutionary themes, and has won a double harvest of ratings and word of mouth.

Looking forward to the future, Perfect World reserves "Green Mountains in the Moon", "The Legend of Yunxiang", "Wish You Years Are Quiet", "Starfall Condenses into Sugar", "Rock and Roll Crazy Flower", "Agent Mission", "Brilliant! splendid! Film and television works such as "Wishful Thinking", "Warm and Sweet", and "Only This Jianghu Dream" are in the process of production and distribution.

New technology exploration depth layout Sustainable development results are abundant

With the development and application of 5G technology gradually landing, the virtual reality industry is breaking through key technologies, improving user experience while promoting the rise and active exploration of the concept of meta-universe, and a new round of scientific and technological revolution and industrial change is poised to take place.

Perfect World has always adhered to technology-driven, continuously accumulated unique advantages and R&D background in core technologies such as game engine research and development, business engine application, 3D modeling and rendering, and actively promoted the application of cutting-edge technologies such as VR/AR, AI, and cloud computing in game research and development.

Taking the "Dream New Immortal" mobile game as an example, the use of AI to collect and analyze the data of the server, automatically generate new forces and NPCs, the real and natural interactive experience enhances the user's sense of game immersion, while the excellent performance of the U3D engine deep rewriting also epitomizes the value of the company's adherence to long-term technical investment. In terms of virtual digital people that have attracted much attention recently, Perfect World has also long been laid out, and since 2020, through CS:GO, it has successively launched the official virtual anchors Ryūji and Eternal Lady, and launched the official virtual idol dodo through DOTA2, which have been welcomed by users.

Since last year, Perfect World has taken the opportunity of the meta-universe, actively explored based on technical advantages, and gradually landed related layouts. In the future, we will continue to realize the infinite extension of the game experience in a larger world through blockbuster game products, with the help of digital twins, intelligent AI expansion, virtual digital people, etc.

On April 25, on the day of the release of the financial report, Perfect World simultaneously released the "2021 Perfect World Sustainable Development Report", which showed in detail the concept and practice of sustainable development from the aspects of corporate governance, sustainable development management, gifts for the centenary of the founding of the Party, technology empowering the wave of digital cultural creation, integrity guarding the network security ecology and helping to outline the beautiful blueprint of the times.

In the context of the digital transformation of the whole society, Perfect World has responded to the call to embrace the integration of digital technology and the real economy. In recent years, with the concept of "cultural and creative thinking", we have joined hands with many partners to empower digital culture for traditional industries such as cultural tourism, consumption, transportation, medical care, health, and industrial parks, and continue to practice the new strategy of "promoting the integration of digital reality and creating social value". In 2021, Perfect World was recognized as one of the "Top 30 National Cultural Enterprises" for the tenth time, reflecting the company's brand influence that continues to grow in the field of China's cultural industry.