Main points of investment:
Gehua Cable is the first provincial cable network listed company, exploring transformation and upgrading in the 5G era. The company is the first batch of pilot units of cultural system reform, the first provincial cable network listed companies, the first batch of triple play radio and television pilot enterprises, and has the right to operate cable TV network in Beijing. It has formed a super-large information basic network platform covering 16 districts of the city and can carry triple play business. In recent years, the company has actively promoted the transformation of cable TV "from analog to digital, from one-way to two-way, from standard definition to HD, and from watching TV to using TV". Promote the strategic transformation from "single cable TV carrier" to "high-quality cultural service operator" and "intelligent radio and television service provider", strengthen technological innovation, expand network coverage, enrich program content, and strive to improve service level and user experience. The company speeds up the deployment of 5G network pilot and explores applications, actively expands the new business of triple play, and provides users with "intelligent radio and television" solutions with comprehensive information services of data, video and new technology. it has become an important supporting platform for the capital's information construction and smart city construction.
Radio and television industry: the traditional business of cable TV is under pressure. After the integration of the national network, the 5G layout is expected to bring new increments. In recent years, the trend of cable television being impacted by new media is obvious. The actual number of domestic cable radio and television users has dropped from a high of 228 million in 2016 to 201 million in 2021. Various units in the industry are not competitive enough for television and broadband services. Faced with intensified competition, loss of users, declining revenue and profits and other problems, there is an urgent need for business diversification to achieve steady growth. The radio and television industry has experienced the change from four-level management to one network in one province and then to one network in the whole country. the promotion of national network integration helps to enhance the intensification and economies of scale of the radio and television industry, and also prepares conditions for the development of 5G telecom services. Radio and television has the right to use the 700MHz band, which has become an important advantageous resource for the development of radio and television. In 2021, China Radio and Television and China Mobile Limited jointly built and shared 200000 5G base stations. The 5G layout of radio and television is expected to open the ceiling of the market, and personal communication business and 2B\ 2G vertical business are expected to be developed in the future. In 2022, the radio and television industry will continue to focus on the national cable television network integration and the integrated development of radio and television 5G construction. Beiguang Media Investment and Development Center, the former controlling shareholder of Gehua Cable, jointly initiated the establishment of China Radio and Television Network Co., Ltd. with part of its shares. The controlling shareholder of the company has changed the shares of Radio and Television. In the future, the company is expected to have a broad field in 5G business.
Coverage for the first time, giving a "overweight" rating. We expect the company's 22-24 net profit to be 2.890.73 / 480 million yuan respectively, with a corresponding growth rate of 38.3%, 29.0% and 28.8%, respectively. Considering that the company is located in Beijing, with outstanding geographical advantages and will make full use of the resource advantages brought by the national one-network integration, the comparable company valuation method is adopted to value the company at 1.1 times PB in 21 years, with a target market capitalization of 14 billion yuan, covering for the first time and giving a "overweight" rating.
Risk hints: 1) the development of 5G industry is not as expected; 2) the progress of "national one network" integration is not as expected; 3) the company's 5G innovation business expansion is not as expected; 4) the progress of new radio and television infrastructure is not as expected.
