在線視頻游戲展望

1、3 February 2019 Americas/United States Equity Research Consumer InternetResearchAnalystsStephenJu212 3258662 HYPERLINK mailto:stephen.ju Philip Wang,Ph.D.212 5383458 HYPERLINK mailto:philip.wang NicoleDSouza212 3256659 HYPERLINK mailto:nicole.dsouza YoniYadgaran212 3256206 HYPERLINK mailto:yoni.yadg

2、aran Online VideogamesPRE RESULTS COMMENTPRE RESULTS COMMENTOutlook 2019: Flat Is the New UpSecular Thesis Not Broken: 2018 provided us with a stark reminder of the importance of content, as it seems like much of the dollar growth in the sector converged at Epic Games. Rather than viewing Epics succ

3、ess as a negative data point against our long-term secular thesis for microtransactions/live services and the transition to free-to-play, we submit that it is entirelyconfirmatory.The Beginning of the Share Claw-back, but Product Development Takes Time: With game development cycles at minimum 18 mon

4、ths, we are likely to see anemic EPS growth in 2019 before improving in 2020 and beyond as new titles see release. As a result, we have lowered our estimates for all three publishers and our updated price targets for ATVI, EA, and TTWO shares are $70 (vs. $79 prior), $120 (vs. $126 prior), and$126 (

5、vs. $137 prior) respectively.ATVI: We expect initial EPS guidance for 2019 to be down YOY given product rationalization - the reversion of Destiny back to Bungie is the biggest change. Given managements aim to focus on both Live Services as well as new content at Blizzard, we find it difficult to fi

6、nd fault with what is effectively a move to allocate capital to the highest ROI-potential projects. While we continue to model Diablo Immortal to see release in 2019 (per prior disclosure from NTES) we assume a more meaningful contribution in 2020, which we anticipate will see Activision return to m

7、ore robust growth especially as we expect a formal Diablo sequel by2021.EA: EA has already offered an initial look at the FY20 slate containing Jedi Fallen Order and Titanfall 3, but we note that both are under development at Respawn. With the likely Holidays release for Episode IX, we expect Jedi F

8、allen Order to be released in 3QFY20, which leaves a window of 4QFY20 for Titanfall. As we would rather be surprised with an earlier arrival, we have elected to move Titanfall 3 in our model to FY21. Near term, we continue to maintain our Anthem unit estimate at 4mm in 4QFY19 and expect headwinds fr

9、om the FIFA Online 3/ 4 transition tomoderate.TTWO: Heading into 3QFY19, we have increased our Red Dead Redemption 2 unit estimate to 25mm for the quarter from 20mm prior, given the strong traction the title has gained since release. We have also modeled ongoing sales in the March quarter at 5.25mm

10、as well. The key consideration for FY20 will be the potential overlap/cannibalization between Red Dead Online and GTA Online. Our estimates currently contemplate a best case scenario of Red Dead Online being completely additive to GTA Online. And as we expect the relative success of both online mode

11、s to adjust managements thinking on release dates of other games to add further polish, we move the following titles to FY21: BioShock 4, Xcom 3 and Borderlands3.DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES, ANALYST CERTIFICATIONS, LEGAL ENTITY DISCLOSURE AND THE STA

12、TUS OF NON-US ANALYSTS. US Disclosure: Creditto do in its As a be the a of of as a in Americas/United States Consumer InternetRatingPrice(01-Feb-19,US$)46.01Targetprice(US$)(from 79.00) 70.00 52-week pricerange(US$)83.39 -43.99Market cap(US$ m)35,108Activision Blizzard, Inc (ATVI)Rationalize, Regrou

13、p, Redeploy for 2020 andEnterprise value(US$m)33,406 Target price is for 12 months.ResearchAnalystsStephenJu212 3258662Event: We decrease our price target from $79 to $70, as we have made significant changes to our near to long term estimates. Our 2019 Adj. EPS estimate is now $2.29 vs. prior$2.70.

14、HYPERLINK mailto:stephen.ju stephen.ju Investment Case: We expect initial EPS guidance for 2019 to be down yearPhilip Wang,Ph.D.212 5383458 HYPERLINK mailto:philip.wang NicoleDSouza212 3256659 HYPERLINK mailto:nicole.dsouza YoniYadgaran212 3256206 HYPERLINK mailto:yoni.yadgaran Share priceperformanc

15、eover year given its moves to rationalize some of its products, with the biggest change being the move to revert Destiny back to Bungie. Given managements aim to focus on both Live Services as well as new content development at Blizzard, we find it difficult to find fault with what is effectively a

16、move to allocate capital to the highest ROI-potential projects. While we continue to model Diablo Immortal to see release in 2019 (per prior disclosure from NetEase) we have elected to assume more meaningful contribution in 2020, which we anticipate will see Activision return to more robust growth e

17、specially as we expect a full Diablo sequel by 2021. We decreased our target price to $70 from $79 as we eliminate Destiny related revenue and reduced estimates for Heroes of The Storm. We maintain our Outperform rating on the following thesis points: 1) ability to produce and maintain high quality

18、franchise content, 2) management execution consistency, 3) strong positioning in the long-term sector transition from CPG to online as well as tomobile.Valuation: Our $70 price target (vs. prior $79) is based on DCF that uses an 11% weighted average cost of capital and 3% terminal growth. Lack of co

19、mmercial traction for any of Activisions game releases presents a risk to ourestimates.Financial and valuationmetrics9 0Year12/17A12/18E12/19E12/20E8 0EPS (CS adj.) (US$)2.292.572.292.577 0Prev. EPS (US$)9 0Year12/17A12/18E12/19E12/20E8 0EPS (CS adj.) (US$)2.292.572.292.577 0Prev. EPS (US$)-2.703.28

20、6 0P/E rel. (%)99.0108.9129.8128.05 0Revenue (US$ m)7,156.07,451.07,079.27,504.54 0EBITDA (US$ m)3,328.83,054.62,717.42,758.6A p r - 1 8Ju l - 1 8O ct - 1 8Jan - 1 9OCFPS (US$)2.902.542.432.66P/OCF (x)21.918.118.917.3On 01-Feb-2019 the S&P 500 INDEX closed at 2705.85 Daily Feb01, 2018 - Feb01, 2019,

21、 02/01/18 = US$73.35Quarterly EPSQ1Q2Q32017A0.310.430.60 2018E0.380.410.52 2019E0.600.400.39 EV/EBITDA(current)10.411.312.712.5Net debt(US$m)-323-1,702-3,252-2,898ROIC(%)15.9625.1020.0622.48Number ofshares(m)763.05IC (current,US$m)BV/share (Next Qtr.,US$)14.9EV/IC(x)3.4Net debt (Next Qtr.,US$m)-1,70

22、2.0Dividend(current,US$)Net debt/tot eq(NextQtr.,%)-14.8Source: Company data, Thomson Reuters, Credit Suisse estimatesActivision Blizzard, Inc (ATVI)Company BackgroundPrice (01 Feb 2019): US$46.01; Rating: OUTPERFORM; Target Price: (from 79.00) 70.00; Analyst: Stephen JuCompany BackgroundIncome Stat

23、ement12/17A12/18E12/19E12/20ERevenue(US$m)7,156.07,451.07,079.27,504.5EBITDA(US$ m)3,3293,0552,7172,759Depr.&amort.(930)(503)(429)(174)EBIT (US$)EBIT (US$)2,3992,5512,2882,585Netinterestexp(159)(125)(66)(60)PBT (US$)PBT (US$)2,2402,4262,2222,525Profit after tax1,3622,3431,8632,114Reported net income

24、 (US$)Profit after tax1,3622,3431,8632,114Reported net income (US$)1,7481,9801,7772,020OtherNPATadjustments0000Adjusted net income1,7481,9801,7772,020Cash Flow12/17A12/18E12/19E12/20EEBIT2,3992,5512,2882,585Netinterest(159)(125)(66)(60)Change inworkingcapital1,233(770)(44)(100)Cash flow from operati

25、onsCash flow from operations2,2131,9591,8892,093CAPEX(155)(172)(140)(145)Free cashflow to the firmFree cashflow to the firm2,0581,7871,7501,948Acquisitions-Divestments80000Cash flowfrominvestments(197)(235)(140)(145)Netshareissue(/repurchase)3,6939100Dividendspaid(236)(259)(200)(202)Changes in Net C

26、ash/Debt1,9651,3791,550(354)Balance Sheet (US$)12/17A12/18E12/19E12/20EAssetsCash &cashequivalents4,7134,4025,9525,598Account receivables9181,052871951Othercurrentassets8439001,0071,121Totalcurrentassets6,5206,3937,8577,690Totalfixedassets294325309281Investment securities0000Total assetsTotal assets

27、18,71718,03319,19618,992LiabilitiesTotalcurrentliabilities3,6632,8092,6802,767Activision develops, publishes and distributes interactive entertainmentsoftware.Blue/Grey Sky ScenarioOur Blue Sky Scenario (US$)Our Blue Sky Scenario (US$)(from 95.00) 75.00We have also elected to run a Blue Sky and Grey

28、 Sky scenario for ATVI shares leveraging historic P/E multiples on next twelve month earnings estimates. Activision historically traded in a range of 10 x- 29x with an average of 17.7x and a standard deviation of 4.9x during the past several years. In terms of upside potential, we apply a 29.0 x pea

29、k multiple to our 2020 EPS estimate and derive a blue sky scenario of$75.Shareholder equity9,46211,52212,81412,524TotalShareholder equity9,46211,52212,81412,524Our Grey Sky Scenario (US$)(from 41.00)33.00Net debt(323)(1,702)(3,252)(2,898)Per shareNet debt(323)(1,702)(3,252)(2,898)Per share12/17A12/1

30、8E12/19E12/20ENo. of shares(wtdavg)764771778786CSadj.EPS2.292.572.292.57Prev. EPS (US$)-2.703.28Dividend(US$)0.000.000.000.00Earnings12/17A12/18E12/19E12/20E Free cash flowEarnings12/17A12/18E12/19E12/20ESalesgrowth(%)8.44.1(5.0)6.0EBITgrowth(%)2.86.3(10.3)13.0Net profitgrowth(%)4.713.3(10.2)13.6EPS

31、growth(%)3.712.3(11.0)12.5EBITDA margin (%)46.541.038.436.8EBIT margin (%)33.534.232.334.4Net margin(%)Net margin(%)24.426.625.126.9Valuation12/17A12/18E12/19E12/20EEV/Sales (x)4.864.484.504.29EV/EBITDA(x)10.411.312.712.5EV/EBIT(x)14.513.113.912.5P/E (x)20.117.920.117.9Asset turnover0.4ReturnsAsset

32、turnover0.4Returns12/17A12/18E12/19E12/20EROIC (%)16.0GearingROIC (%)16.0Gearing12/17A12/18E12/19E12/20ENetdebt/equity(%)(3.4)(14.8)(25.4)(23.1)Quarterly EPSQ1Q2Q3Q4Interest coverageratio(X)15.120.434.643.0Quarterly EPSQ1Q2Q3Q4As we think about where we will be at the end of 2019, we apply a lower b

33、ound P/E multiple of 12.8x (average less one standard deviation) to our 2020 EPS estimate of $2.57, to derive a grey sky scenario of$33.Share price performance908070605040Apr- 18l -18Oct- 18Jan - 19ATVI.OQS&P 500 INDEXOn 01-Feb-2019 the S&P 500 INDEX closed at 2705.85 Daily Feb01, 2018 - Feb01, 2019

34、, 02/01/18 = US$73.352017A0.310.430.600.942018E0.380.410.521.26 2019E0.600.400.390.89 Source: Company data, Thomson Reuters, Credit Suisse estimatesActivision Blizzard, Inc. (ATVI): Rationalize, Regroup, Redeploy for 2020 and BeyondWe expect initial EPS guidance for 2019 to be down year over year gi

35、ven its moves to rationalize some of its products. The biggest change was the recently-announced move to revert Destiny back to Bungie - we were previously anticipating a third iteration in the franchise as a potential catalyst for 2020.Given managements aim to focus on both Live Services as well as

36、 new content development at Blizzard, we find it difficult to criticize what is effectively a move to allocate capital to the highest ROI-potential projects.Despite the uncertain game approval environment in China, we continue to model Diablo Immortal to see release in 2019 (per prior disclosure fro

37、m NetEase). That said we have it modeled to arrive in 4Q19 to contribute more meaningfully in 2020. We hence expect 2020 to be the year to see Activision return to a more robust growth path especially as we anticipate a full Diablo sequel by 2021.We have made the following changes to our medium-to-l

38、onger term estimates:Decreased estimates for Heroes of The Storm with both user and ARPU declining over time given Blizzards decision to redeploydevelopersAdded season pass estimates for Black Ops4Added Crash Team Racing Nitro-Fueled with 500k units in2019Added Warcraft III: Reforged with 1.5 millio

39、n units in3Q19Separated out mobile game projection franchise by franchise with a standalone China version for Call of Duty, Diablo and World of Warcraftrespectively.Eliminated all Destiny releases and microtransactions estimates Changes to our 4Q18, 2019, and 2020 forecasts are as shownbelow.Figure

40、1: Activision Blizzard, Inc. CS Estimate Revisions4Q184Q18PriorFX-Only%4Q18Current4Q184Q18PriorFX-Only%4Q18Current%20192019PriorFX-Only%2019Current%20202020PriorFX-Only%2020Current%Non-GAAP NetRevenue 3049.13039.7-0.3%3024.0-0.8%7387.47373.3-0.2%7079.2-4.2%8336.48318.3-0.2%7504.5-10.0% EBITDA1319.41

41、313.2-0.5%1315.8-0.3%2847.82838.3-0.3%2443.6 -14.2%3459.33447.8-0.3%2758.6-20.3% EPS$1.26$1.25-0.5%$1.26-0.3%$2.70$2.69-0.4%$2.29-15.4%$3.28$3.27-0.4%$2.57-21.7%Source: Company data, Credit Suisse estimatesOur unit sales estimate for Call of Duty: Black Ops 4 stands at 24 million units in 2018 and 2

42、9 million units over the life of the title. And we present below a sensitivity study of what the upside potential and downside risk could be based on a unit volume range of 21 million units to 28 million to our 2018 Revenue and Adjusted EPSestimates.Figure 2: Activision Blizzard, Inc. Call of Duty:

43、Black Ops 4 Sensitivity AnalysisCall of Duty Black Ops 4 (in millions)Units (mm)21.022.023.024.025.026.027.028.0Revenue ($mm)7302.47351.97401.57451.07500.57550.17599.67649.1EPS$2.47$2.50$2.54$2.57$2.60$2.63$2.67$2.70Source: Company data, Credit Suisse estimatesEach incremental million units yield ab

44、out $0.03 in EPS.Our updated release slate for the packaged goods titles is as shown below:FY19EFY20EFigure 3: Activision Blizzard Inc. FY19 and FY20 ReleaseSlateFY19EFY20ECPG PC FGD DLC TotalCPG PC FGD DLC Total Call of Expansion1Q2011Q19E11Q19ETotal01Q20ETotal-11Crash Team Racing Nitro-FueledWarcr

45、aft III: ReforgedCall of Duty 2019 - Infinity WardSource: Company data, Credit Suisse estimatesCPG PCFGD DLC TotalCPG PCFGD DLC Total2Q19ETotal1-1-22Q19ETotal1-1-2212Q20E2Q20ETotal-11CPG PCFGD DLC TotalCPG PCFGD DLC Total3Q19ETotal-1-1111Call of 3Q19ETotal-1-11113Q20E3Q20ETotal-1-12CPG PCFGD DLC Tot

46、alCPG PCFGD DLC Total4Q19ETotal111-3844Q19ETotal111-3841212020E TotalCPG PCFGD DLC Total602222019E TotalCPG PCFGD DLC Total3314Q20E4Q20ETotal11114We also include below our updated unit sales projections on a title-by-title basis for FY19 and FY20:Figure 4: Activision Blizzard, Inc. FY19 and FY20 Uni

47、t Sales Projectionsin millions, unless otherwisestatedFY19 Units (mm)FY20 Units (mm)1Q19 Releases1Q20 ReleasesCall of Duty Expansion 1Q202.0Total0.0Total2.02Q19Releases2Q20 ReleasesCrash TeamRacing Nitro-Fueled0.5Call of Duty Expansion 2Q202.0Total0.5Total2.03Q19Releases3Q20 ReleasesIII: Reforged1.5

48、Call of Duty Expansion 3Q202.0World of Warcraft Expansion 20203.9Total1.5Total5.94Q19Releases4Q20 ReleasesCall of Duty 2019 - Ward20.2Call of Duty 2020 - Sledgehammer22.1Call of Duty Expansion 4Q202.0Total20.2Total24.1FY19 Total22.2FY20 Total34.0Source: Company data, Credit Suisse estimatesValuation

49、We maintain our Outperform rating and our updated price target for end-2019 is now $70 versus prior $79. We use a weighted cost of capital of 11% and terminal growth rate of 3%.Figure 5: Activision Blizzard, Inc. Discounted Cash Flow Analysisin millions, unless otherwisestatedCAGR2019E2020E2021E2022

50、E2023E2024E19-24EBITDA2443.62758.64351.75837.55493.96080.920.0%Net Income1777.52019.93280.54469.84188.64650.921.2%Depreciation & Amortization339.0364.0480.3561.1528.5606.812.3%Other Non-Cash Charges (Benefits)0.00.00.00.00.00.0Interest Expense (Income)66.260.256.030.513.6(3.2)Changes in Operating As

51、sets & Liabilities(227.1)(290.6)(351.6)(317.0)(323.9)(281.8)Unlevered Cash Flows1955.62153.43465.24744.34406.84972.820.5%Capital Expenditures139.6145.4186.2198.6193.1211.38.6%Unlevered Free Cash Flows1816.02008.03279.04545.74213.74761.521.3%Y/Y % Change(24.6)%10.6%63.3%38.6%(7.3)%13.0%Weighted Avera

52、ge Cost of Capital11.0%Perpetual UFCF Growth Rate (G)3.0% 2019E NPV of Unlevered Free Cash Flows15211.5Present Value of Terminal Value36381.1Enterprise Value51592.6Off-Balance Sheet Assets0.0Adjusted Enterprise Value51592.6Year End Net Debt (Cash)(3251.9)Equity Value54844.5Diluted Shares Outstanding

53、780.7Equity Value Per Share$70Source: Company data, Credit Suisse estimatesWe have also elected to run a Blue Sky and Grey Sky scenario for ATVI shares leveraging historic P/E multiples on next twelve month earnings estimates. Activision historically traded in a range of 10 x-29x with an average of

54、17.7x and a standard deviation of 4.9x during the past several years. As we think about where we will be at the end of 2019, we apply a lower bound P/E multiple of 12.8x (average less one standard deviation) to our 2020 EPS estimate of $2.57, to derive a grey sky scenario of $33. In terms of upside

55、potential, we apply a 29.0 x peak multiple to the same EPS estimate and derive a blue sky scenario of$75.Figure 6: Activision Blizzard, Inc. Historical Forward P/ERange30.028.026.024.022.020.018.016.014.012.0May-10 Sep-10 Jan-11 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 S

56、ep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 May-17 Sep-17 Jan-18 May-18 Sep-18Jan-19Source: Company data, Credit Suisse estimatesRisks to our Outperform rating and target price for ATVI shares are:Lack of commercial traction for any of Activisions gamereleasesFailure

57、to transition existing console and PC properties to online free to play and/ormobileAmericas/United States Consumer InternetRatingPrice(01-Feb-19,US$)91.22Targetprice(US$)(from 126.00) 120.00 52-week pricerange(US$)148.93 -74.72Market cap(US$ m)27,560Electronic Arts, Inc (EA)Expecting Modest FY20, b

58、ut Titanfall Coming inFY21Enterprise value(US$m)24,144 FY21Target price is for 12 months.ResearchAnalystsStephenJu212 3258662Event: We decrease our price target from $126 to $120, as we have made significant changes to our release slate projections. Our FY19 and FY20 Adj. EPS are now $4.42 vs. prior

59、 $4.43 and $4.46 vs. prior $4.78,respectively. HYPERLINK mailto:stephen.ju stephen.ju Investment Case: EA has already offered an initial look at the release slatePhilip Wang,Ph.D.212 5383458 HYPERLINK mailto:philip.wang NicoleDSouza212 3256659 HYPERLINK mailto:nicole.dsouza YoniYadgaran212 3256206 H

60、YPERLINK mailto:yoni.yadgaran Share priceperformance1 501 301 109070A p r- 18l -18O ct- 18Jan - 19EA.OQS& P 5 0 0IN D EXOn 01-Feb-2019 the S&P 500 INDEX closed at 2705.85 Daily Feb01, 2018 - Feb01, 2019, 02/01/18 = US$128.18Quarterly EPSQ1Q2Q3Q42018A0.310.622.18 1.282019E0.150.881.90 1.492020E0.361.