标题：Beijing Ultrapower Software(300002.SZ)Sluggish Fetion & game segments to drive down 4Q profit; Neutral
发布日期：2016-02-26 10:21:38
内容： What's changed On January 30, 2016, Ultrapower announced a FY2015 profit warning, withnet profit expected to fall to between Rmb343mn and Rmb437mn, a c.30-45% yoy contraction and c.49-60% below GHe. The company primarilyattributes this expected net profit contraction to: 1) revenue declines in theinternet operation segment, especially the Fetion business with ChinaMobile; 2) Zhongqing Longtu (20% owned by Ultrapower) experienced asignificant operating loss which negatively impacted Ultrapower’sinvestment gain; and 3) a goodwill loss recognized in its fully-ownedsubsidiary Camel Game. Implications 1) We expect revenue growth and gross margin of the IT ServiceManagement (ITSM) segment to remain stable and mainly attribute thedecline in total revenue growth to the internet operation segment in 2015. 2) We expect Fetion (an instant messaging service) business will continueto lose its relevance, although the negative impact might be compensatedby growth in new products in 2016. 3) Ultrapower is reducing itsshareholding in the E-commerce subsidiary (Rmb150mn revenuecontribution in 2015, but loss making from net income perspective) to 40%in 2015 and it will not be consolidated from 2016. 4) We now believe SG&Awill not fall as fast as previously expected since Ultrapower is stilldiversifying its business lines and investing in new products R&D. Valuation We lower our 2015E-17E earnings by 21%-53% and by 20%-21% for 2018E-20E after factoring in sluggish revenue growth for 2015E and a higherSG&A ratio in 2015E-2020E. We cut our 12-m long-term discounted P/EbasedTP to Rmb8.0 (from Rmb10.0) based on an unchanged global peers’median 2016E P/E of 21X applied to our 2020E EPS of Rmb0.54 (wasRmb0.68) discounted to 2016E at 9% COE. Maintain Neutral. Key risks Upside: Stronger revenue from Camel Game’s new title in 2016. Downside:Slower-than-expected new business ramp-up.
发布日期：2016-02-26 10:21:38
内容： What's changed On January 30, 2016, Ultrapower announced a FY2015 profit warning, withnet profit expected to fall to between Rmb343mn and Rmb437mn, a c.30-45% yoy contraction and c.49-60% below GHe. The company primarilyattributes this expected net profit contraction to: 1) revenue declines in theinternet operation segment, especially the Fetion business with ChinaMobile; 2) Zhongqing Longtu (20% owned by Ultrapower) experienced asignificant operating loss which negatively impacted Ultrapower’sinvestment gain; and 3) a goodwill loss recognized in its fully-ownedsubsidiary Camel Game. Implications 1) We expect revenue growth and gross margin of the IT ServiceManagement (ITSM) segment to remain stable and mainly attribute thedecline in total revenue growth to the internet operation segment in 2015. 2) We expect Fetion (an instant messaging service) business will continueto lose its relevance, although the negative impact might be compensatedby growth in new products in 2016. 3) Ultrapower is reducing itsshareholding in the E-commerce subsidiary (Rmb150mn revenuecontribution in 2015, but loss making from net income perspective) to 40%in 2015 and it will not be consolidated from 2016. 4) We now believe SG&Awill not fall as fast as previously expected since Ultrapower is stilldiversifying its business lines and investing in new products R&D. Valuation We lower our 2015E-17E earnings by 21%-53% and by 20%-21% for 2018E-20E after factoring in sluggish revenue growth for 2015E and a higherSG&A ratio in 2015E-2020E. We cut our 12-m long-term discounted P/EbasedTP to Rmb8.0 (from Rmb10.0) based on an unchanged global peers’median 2016E P/E of 21X applied to our 2020E EPS of Rmb0.54 (wasRmb0.68) discounted to 2016E at 9% COE. Maintain Neutral. Key risks Upside: Stronger revenue from Camel Game’s new title in 2016. Downside:Slower-than-expected new business ramp-up.
