Overview of events
On the evening of January 25, 2022, Jiecheng shares released a forecast of its annual report that the company expected to return to its mother in 2021 with a net profit of 4.5-490 million yuan and a deduction of non-net profit of 3.4-380 million yuan, turning losses into profits over the same period last year.
Steady growth of copyright business, continued efforts in film library distribution and digital cinema line, according to the announcement, the company's new media copyright business is expected to achieve business revenue of about 3.087 billion yuan, an increase of 28% over the same period last year, and a net profit of about 561 million yuan, an increase of 22% over the same period last year. Since 2019, after strategic focus and divestiture, the company's new media copyright business has continued to pick up, especially when the development of the domestic film industry stalled and the company's new film distribution business was affected by the COVID-19 epidemic in 2020, the company has increased the distribution efforts of the film library to further improve the cashability of the film library. At the same time, the company seizes the opportunity of the development of the large screen end in the 5G era to expand the family multi-screen digital distribution model and build a family living room cinema, which is highly consistent with the industry development planning spirit of "expanding film consumption new business type", "on-demand cinemas and on-demand cinemas" put forward in the film industry's 14th five-year Plan.
According to the announcement, Shiyou Technology, a subsidiary of the company engaged in digital virtual human business, achieved 34.3799 million yuan in revenue and 8.0435 million yuan in net profit in 2021, including 11.6735 million yuan in revenue and 3.339 million yuan in net profit in the first three quarters, which is calculated to achieve 2270.64 million yuan in revenue and 470.45 million yuan in net profit in 2021. Q4 single-quarter results showed a doubling growth trend. Shiyou Technology focuses on the research, development and application of real-time virtual technology. It is a platform for virtual real-time / fast virtual content production and virtual IP production developed independently in China. In the past, it has landed digital virtual application cases of leading customers in radio and television, Internet and brand customers, education, film and television animation and other industries. At present, it is one of the few independent R & D patent technologies of A-share and meta-universe-related listed companies. And can achieve considerable performance of the meta-universe company.
There is a continuous spring breeze in industry policies, equity incentives, divestiture to ensure sustained and healthy development, "outline of intellectual property Power", "14th five-year Plan of the Film Industry", "detailed rules for the examination of short Video content" and other policy documents are significantly conducive to the long-term development of the company's film and television copyright operation business. The company has made continuous breakthroughs in the underlying technology of meta-universe, and the track of virtual digital human, audio and video technology is highly prosperous. In 2020, the company introduced XIAOMI War Investment to strengthen cooperation with hardware manufacturers on the channel side, continued to promote the fixed increase of war investment, optimized the company's equity structure, and issued an equity incentive plan in the third quarter of 2021, encouraging senior executives and core business backbones of the company. to provide guarantee for the sustained and healthy development of the company's main business. In December 2021, the company completed the divestiture, 2022 young wear, is expected to achieve further growth in business performance.
Investment advice: maintain a "buy" rating
According to the annual report performance forecast, we downgrade the company's 2021-2023 revenue forecast of 3620max $4360max 5264 million to 3.604max $52.254 billion, the 2021-2023 net return forecast of 5.57pm 717pm 921 million to 472max $902 million, and the forecast of EPS 0.22max 0.28max 0.36 yuan to 0.1817pm 0.35 yuan. Corresponding to the closing price of 6.08 yuan per share on January 26, 2022, PE is 33, 22 and 17 times respectively. The company's current film and television copyright business barriers are high, while continuing to explore the meta-universe format. The completion of the divestiture means that the company will further focus on the advantage of the main business, the original negative impact of other sectors of business on the company's performance is basically eliminated, the company's overall valuation level is expected to further improve and maintain the "buy" rating.
Risk hint
The progress of the introduction of strategic investment shareholders is not as expected; the film and television copyright business is likely to be regulated; and the small volume of Shiyou technology will not have a significant impact on the company's revenue and profits at present, and there is still uncertainty about the impact on the company's performance and operating results in subsequent years.