Recently, Sanqi Mutual Entertainment released its 2023 annual report and 2024 first quarter performance forecast. According to the announcement, the company will achieve operating income of 16.547 billion yuan in 2023 and net profit attributable to the parent company of 2.659 billion yuan, and the operating income is expected to increase by more than 25% year-on-year in the first quarter of 2024, and the net profit attributable to the parent is expected to be 600 million yuan to 650 million yuan, which is expected to increase by 30%-40% month-on-month.
In particular, it is worth mentioning that Sanqi Mutual Entertainment also said that it plans to increase the frequency of dividends from the original semi-annual to once a quarter, with a dividend of no more than 500 million yuan per period, and a total dividend of no more than 1.5 billion yuan, becoming the first listed company in A-share to propose a continuous quarterly dividend plan.
Paid quarterly and dividends four times a year, this move immediately aroused great attention and discussion in the market. Is there some new opportunity behind it for investors?
1. High dividends + executive holdings + company repurchases, real money shows long-term confidence
Judging from historical data, Sanqi Mutual Entertainment has maintained a stable dividend twice a year for many years, and the dividend ratio has shown a significant upward trend, showing the sustainability and growth of the company's profitability.
According to the 2023 annual profit distribution plan, the company intends to distribute cash dividends of 3.70 yuan (tax included) to all shareholders for every 10 shares, and the amount of the dividend plan for 2023 is expected to be 820 million yuan, plus the previous dividend amount of 992 million yuan in the first half of 2023, the total dividend in 2023 accounts for 68% of the annual net profit attributable to the parent company. The cumulative dividend amount in the past five fiscal years is expected to reach 6.648 billion yuan.
According to Choice data, the current dividend yield of Sanqi Mutual Entertainment (in the past 12 months) is about 5.4%, ranking third in the game sector (CITIC Level 3 industry index classification), higher than the industry average.
The stable dividend mechanism for many years is not only a commitment to shareholders, but also a reflection of the profitability and financial soundness of Sanqi Mutual Entertainment. This aggressive shareholder return strategy helps to enhance the confidence of the capital market in the company and enhance the company's market stability.
In addition, institutional investors generally attach importance to the company's dividend policy, and the continuous quarterly dividend plan proposed by Sanqi Mutual Entertainment will further attract the attention of long-term funds and enhance the market's recognition of the company, thereby providing strong support for the company's valuation improvement and long-term development.
Through this dividend policy, Sanqi Mutual Entertainment not only shows its respect for the interests of shareholders, but also conveys to the market its sense of responsibility as a leading enterprise in the industry and its firm confidence in future development. As the company continues to expand its market share and enhance its profitability, it can be expected that Sanqi Mutual Entertainment will create greater value for shareholders through a high-frequency dividend policy.
In addition, since the end of December last year, the executives of Sanqi Mutual Entertainment have begun to increase their holdings, and the actual controller, controlling shareholder, chairman Li Weiwei, general manager Xu Zhigao, and vice chairman Zeng Kaitian have successively completed the increase in shares with their own funds, with a total transaction amount of more than 85 million yuan.
It is worth mentioning that at the end of 2023, the company also announced the use of 100 million yuan-200 million yuan of its own funds for share repurchase, and the repurchased shares will be used to cancel and reduce the registered capital, and on January 15, 2024, the first time through the special securities account for share repurchase in a centralized bidding transaction to repurchase shares, the number of repurchased shares is about 5.6266 million shares, accounting for 0.25% of the company's current total share capital, of which the highest transaction price is 18.13 yuan / share, and the lowest transaction price is 17.66 yuan / shares, the total amount of payments is about 101 million yuan.
This series of measures not only demonstrates the executives' recognition of the company's value and confidence in the long-term healthy development, but also prevents the company's stock price from being too low and deviating from the actual value, and protects the rights and interests of shareholders.
2. The industry is gradually recovering and the rich new travel reserves are ready to go
As an investor, to judge the investment value of Sanqi Mutual Entertainment, the most fundamental thing is to return to the development trend of the industry, the company's fundamentals and subsequent growth points. Sanqi Mutual Entertainment's proposal for continuous quarterly dividends, the company's repurchase and cancellation to reduce the registered capital, and the reasons for the large repurchase and increase of many senior executives are also based on these two points.
With the return to normalization of the issuance of game version numbers in 2023, a total of 1,075 new game versions will be issued throughout the year, a year-on-year increase of 109.96%, doubling. This is also a trend of re-increasing the number of edition numbers issued after five consecutive years of decreasing.
There are various signs that the game industry is gradually recovering, and it is expected to enter a profit recovery cycle, and it may be able to return to a good performance growth rate in 2024.
The company adheres to the long-term operation of existing games, and extends the vitality of many games such as "Douluo Continent: Soul Master Showdown", "Puzzles &Survival", "Call Me the Big Shopkeeper" and "Little Ant Country" through IP linkage and other strategies.
Extending the perspective, Sanqi Mutual Entertainment currently has more than 40 products in reserve, which provides a strong impetus for the company's subsequent performance growth. In order to explore user needs and market growth points, Sanqi Mutual Entertainment continued to break through the operation of game categories, and on the basis of the four cornerstone categories of MMORPG, SLG, cards, and simulation management, it developed light game genres such as RPG and casual puzzles, and benefited from the successful practice of the company's "self-research + agency" model, creating a continuous and rich product matrix of the company.
3. Summary
Overall, a series of actions such as continuous high dividends, increasing the frequency of dividends, increasing the holdings of senior executives, and repurchasing the company all demonstrate Sanqi Mutual Entertainment's firm confidence in its future sustainable growth and send a positive signal to the market.
In the context of the increasing certainty of the development of the game industry, Sanqi Mutual Entertainment has outlined a clear growth path with its rich game product reserves.
In particular, with the leading advantage of first-mover exploration of AI applications, Sanqi Mutual Entertainment has successfully applied AI technology to the company's various businesses, creating a digital and intelligent product matrix that runs through the whole process of research and operation, including "Zeus", "Athena", "Poseidon", "Ares" and "Cupid" on the R&D side, and nine mid-platform products such as "Turing", "Quantum", "Tianji" and "Yilan" on the promotion and operation side. At the same time, Sanqi Mutual Entertainment has developed an internal AI Agent platform that upgrades the independent decision-making function for various digital and intelligent products and improves the efficiency of collaborative office, significantly improving the industrialization level of the game research and operation pipeline and the overall operation efficiency of the enterprise.
At present, Sanqi Mutual Entertainment's generative AI technology has been maturely applied to modules such as 2D drawing, intelligent customer service, localized translation, copywriting production, and collaborative office, greatly improving human efficiency. For example, in terms of art design, the company develops and distributes a total of more than 280,000 AI-2D drawings per month by developing and distributing various business lines, and in the process of character original drawings, the company can save an average of 60%-80% of man-hours by implementing the new process of AI production of 2D art.
As the company continues to deepen the application of technology and optimize its game product line, it may usher in a new round of valuation reshaping opportunities.