Why is Kunlun Wanwei a ＂good company＂ that was accidentally injured？

　　Uncle Wen/Yu

　　Finding a good company is the key to investing in the capital market.

　　How to become a stock god? Sometimes the answer is actually simple.

　　Buffett and his partner, Charles Munger, a well-known investor, have expressed their investment philosophy very clearly. Their core point is to use various practical and effective methods to continuously find excellent companies with high quality and low price in the capital market. They insist that investors should be wise to "buy high-quality companies at reasonable prices, rather than choose an ordinary company at a slightly overestimated price."

　　The expression of this investment concept is not only the heartfelt words of Buffett and Munger, but also a true portrayal of their investment practice.

　　Therefore, in the vast field of capital market, whether it is a fund manager with tens of millions of funds or a large number of investors who are active in the stock market, their real purpose is to look at all kinds of data and consult all kinds of charts every day, in fact, in the vast ocean of stocks, to find that high-quality company with reasonable price and basically good orientation.　

　　Now the identification of good companies comes from a big discussion in 2019.

　　In 2019, WeWork, once known as the world’s largest unicorn enterprise and a pioneer in shared office, is applying for an IPO. However, in the process of listing, many problems of this company gradually surfaced, and it is surprising to find that its essence is just a traditional two-landlord model that has existed for centuries.

　　Later, wall street analysts reached a common conclusion: no matter the new economy or the old model, enterprises that can invest in science and technology and have excellent products are good companies; Only enterprises that achieve stable profits through these products can be called a good model. And if the company has the ability to cross the cycle because of this model, it is more worthy of long-term investment.　

　　"At present, there are many conditions for the capital market to identify a good company. Generally speaking, the core is the competitiveness of the enterprise and the strength of barriers, whether the enterprise increases and continuously invests in scientific research to ensure competitiveness, whether the enterprise has long-term and stable profits in the face of such competitiveness, and whether the enterprise can be prepared to cross the cycle." Toby Lin, a well-known Hong Kong securities market analyst, said that as an observer of the capital market, analysts are the people who are most related to the fundamental data of the enterprise. The evaluation criteria set by these people for good companies often seem inconspicuous, but they really affect the cognition of the entire capital market and the direction of funds.　

　　From an economic point of view, such a good company standard is in line with both theory and practice, and it is a market consensus that can become a common divisor.

　　Good companies have to open the data to see it.　

　　In fact, finding a good company is not a simple job.

　　"Some good companies are very successful, and they have always been successful, which makes them become the core stocks and heavyweights of the stock market as soon as they go public", but even so, Toby Lin believes that the task and daily challenge of analysts is actually to find those good companies that are covered up by data in a pile of data. "Because for stock market investors, the good company found in this way is more valuable. After all, the investment cost is not so high compared with the recognized market value leader."　

　　This is also the reason why brokers and investment banks try their best to improve their analyst level.

　　Of course, what is more interesting is that sometimes analysts have to go through the fog brought by negative news and find those really good companies through accurate data analysis. "This is a particularly fulfilling thing," Toby Lin said.

　　In his view, some companies suddenly exposed negative public opinion because of various situations, but in fact, the fundamental data is very good, which is an investment opportunity that deserves special attention.　

　　Kunlun Wanwei, which has been plagued by negative news recently, is a good example.

　　Although it was revealed that the major shareholder reduced its holdings by 3% in more than one month and attracted the attention of the CSRC, in the opinion of analysts, the company’s performance in the capital market is now "injured by accident".

　　On the one hand, shareholder Li Qiong is the ex-wife of the company’s founder, and the relevant shares were also split during the divorce in 2016, but she is not an executive of this company, nor is she acting in concert. This means that the shareholder’s reduction does not represent the wishes and ideas of the enterprise management.　

　　In other words, Kunlun Wanwei is "paying the bill" for the public opinion brought by non-enterprise decision-making, which is indeed somewhat "unjust".

　　On the other hand, the main context of this enterprise’s financial report data is clear, which shows that Kunlun Wanwei is actually a good company in the capital market.

　　Analysts generally look at companies with good capital markets according to four criteria, that is, the competitiveness of enterprises and the strength of barriers, whether enterprises increase and continuously invest in scientific research to ensure competitiveness, whether enterprises have long-term and stable profits in the face of such competitiveness, and whether enterprises can be prepared to cross the cycle.　

　　First of all, in terms of competitiveness and barriers, Kunlun Wanwei started from overseas game business, and later transformed to acquire browser manufacturer Opera. In 2021, Kunlun Wanwei acquired StarX, which is known as the "overseas version of national karaoke", and made Opera a "one-stop community of gamers and creators" to promote the company’s layout in the direction of the meta-universe.

　　After the explosion of the big model, this enterprise revealed its long-term layout in this respect. In December 2022, Kunlun Wanwei has released a full range of AIGC algorithms and models, covering the multi-modal AI content generation capabilities such as images, music, text and programming. On April 17, 2023, Kunlun Wanwei officially released the 100 billion-level large language model "Tiangong".

　　The launch of the "Tiangong" big language model marks the further expansion of Kunlun Wanwei’s AI territory, and once again proves its technical accumulation and firm investment in the field of artificial intelligence. And this kind of investment and merger that can catch up with the "window" every time, coupled with its long-term investment in the field of large models, has formed a competitive barrier for enterprises.

　　Secondly, in terms of investment in scientific research, Kunlun Wanwei has maintained nearly double-digit growth in the last year. Last year’s third quarterly report showed that its R&D investment was 484 million, with a growth rate of 9.94%; The 2022 annual report shows that its scientific research growth rate exceeds 15%; A quarterly report shows that this trend is still maintained, and the growth rate of scientific research investment exceeds 17%.

　　This kind of investment in scientific research has been equivalent to the curve of investment in scientific research of very leading technology-based enterprises after new products and technologies have landed, which shows that Kunlun Wanwei is transforming from a game distribution and agency enterprise to a technology enterprise with Internet and big models as its core business, which is very important for investors in the capital market.

　　Third, from the long-term stability of competitiveness, that is, profit, Kunlun Wanwei also meets the evaluation conditions of a good company in the capital market.

　　From last year’s annual report and the first quarterly report of this year, it can be seen that the seemingly declining profits of this enterprise actually have a "mystery". Although the annual profit was 1.401 billion, down 10.3% year-on-year, and the profit in the first quarter was 303 million, down 22.46% year-on-year, if we only look at the operating income and total operating cost, we can find the basic fact that the data can’t show: that is, the "culprit" that really caused the decline in profits was actually the decline in non-operating net income.

　　As can be seen from the income statement, the total revenue of Kunlun Wanwei last year was 4.738 billion, but the total operating cost was only 3.903 billion. The two sets of data are simply subtracted, and the profit brought by operating business is 835 million; In 2021, the total revenue of the annual report was 4.85 billion, the total cost was 4.322 billion, and the profit from operating business was 528 million. This means that if we don’t look at the non-operating net income, we only look at the income and total cost of operating business, and its profit will increase by more than 50% in 2022.

　　The same is true for the first quarterly report, because the total revenue was 1.217 billion, which was 2.04% higher than the same period of last year, and the total cost decreased by 7.45%. From this data ratio, the profit of this enterprise’s business in the first quarterly report should have a substantial increase compared with the same period of last year. However, the current decline of 22.46% in profits is related to the decline of nearly 70% in non-operating income.

　　Therefore, from the perspective of enterprise operation fundamentals, this enterprise not only has no problem, but is really in a state of rapid growth of its main business, which, together with the large model market it has entered, can be said that Kunlun Wanwei can maintain a steady growth trend for a long time.

　　As far as the ability to cross the cycle is concerned, this enterprise has long made efforts in the big model, which has become the highlight of enterprise decision-making and has been unanimously recognized by the capital market.

　　Kunlun Wanwei of All in Large Model　

　　Zhou Yahui, the founder of Kunlun Wanwei, has always had an idea about the ability to cross the cycle. In 2019, when the major Internet giants had not paid attention to the big model and AIGC, Kunlun Wanwei, who was doing well in games, browsers and other fields at that time, keenly noticed this and started its own layout in the second year.

　　By the year 2020, Kunlun Wanwei has achieved rich and diversified development in business construction. At that time, the company set up diversified business sectors such as music social platform StarX, information distribution platform Opera, game platform Ark Games, competitive entertainment platform and investment sector, which have already constituted the business matrix of Kunlun Wanwei.　

　　Also in this year, GPT-3 was born, and Kunlun Wanwei began to invest in AIGC for the first time. "At that time, we judged that this was a milestone in the field of content generation. I didn’t expect it to become a breakthrough in general artificial intelligence two years later. It is also from then on that we have decided to follow up AIGC, because we must not fall behind in the field of content generation. " CEO Fang Han once publicly stated a few days ago. It is precisely because of this opportunity that Kunlun Wanwei started the pre-training and research and development of large models.

　　Finally, in the evolution of their own business, they started the SkyMusic Music Lab in combination with their own needs and forward-looking predictions about the Internet, and achieved the best results in the field of artificial intelligence in April 2022. At the same time, Kunlun Wanwei expanded from music AI to multi-modal AI, combined with its own technical achievements in the field of large models, and reached a comprehensive technical strategic cooperation with Singularity Zhiyuan in the technical fields of tens of billions of large language models, image AIGC, programming AIGC, etc. At the end of 2022, it announced that the full range of models were open source. The birth of the "Tiangong" 100 billion-level model is the accumulation of long-term technology.

　　To some extent, such technical ideas have brought different development advantages.

　　It is generally believed in the industry that the next feasible business logic of the big model should be to use industry data to make a big model of the industry, help the industry to grow by leaps and bounds, and empower C-end applications. It is also based on this point that "Tiangong" has been deployed overseas in the fields of AI music, AI comics, AI games, etc., hoping to use the big model to empower related industries. This is actually related to the layout of this enterprise in these fields.

　　Interestingly, the growth and training of large models need the support of a lot of data. At present, both ChatGPT and Bard of Google are leading in the field of general large models. They are all trained through the huge data brought by search engines, subdivided into specific industries, and the corresponding data volume and data activity have not met the real needs of users.　

　　This is actually the real opportunity for China enterprises to overtake in corners.

　　Kunlun Wanwei is very clever at this point. They start with their familiar fields to ensure that they have sufficient industry data to train the model, and the corresponding performance results will be applied to the industry development soon.

　　This is a positive cycle, so it will certainly have great appeal to industry enterprises.

　　According to the latest news, Kunlun Wanwei announced on the evening of July 14th that Honeywood Technology intends to purchase technical services from the company, including AI text generation capability and AI image generation capability. The purpose of the service is to support the technical landing of Honeywood Technology in the direction of customizing large models, with a term of one year and a total amount of no more than 15 million yuan.

　　I believe this news is not the end, but just the beginning.

　　In fact, Zhou Yahui had already prepared for the ALL IN big model, and said in an interview with Forbes, "The past three years have made me understand very well that an enterprise needs to focus on one direction. Therefore, Kunlun Wanwei simplified the investment about three years ago. Put all the investment into Kunlun Capital, the investment platform below. At the same time, it is clear that AIGC and artificial intelligence are the future direction, and the business unrelated to this direction is slowly stripped out. "

　　Therefore, from this perspective, the transformation model is not the idea of Kunlun Wanwei slapping his head, but a well-thought-out result. At the same time, Kunlun Wanwei, which meets the company’s standard of capital market evaluation, has an investment prospect that can be met.

　　This is even more important for investors.