Performance review
3Q22 performance is higher than we expected.
The company announced 3Q22 results: 3Q22 revenue was 564 million yuan, an increase of 1.8% over the same period last year; net profit from home was 277 million yuan, a big increase over the previous year, and net profit from non-return was 48.14 million yuan, an increase of 16.2% over the same period last year, slightly higher than we expected, mainly because To-B business income such as equipment sales was higher than we had expected, and cost control was more effective.
Trend of development
The traditional cable TV industry is still under pressure, and the company's overall business is running smoothly. The company's 3Q22 revenue increased slightly compared with the same period last year, while the gross profit margin decreased and 2.7ppt/ increased to 9.6% compared with the same period last year. We believe that the external competition in the cable TV industry is still fierce. In the face of competition from IPTV, OTT and mobile long video platforms, the company is facing problems such as user loss, and there is still some pressure on the cable TV business in the short term.
From a comprehensive point of view of the company's business, we believe that the company's income may maintain a relatively stable level in the short term.
The operating rate is relatively stable, and the investment income is gained by reducing the holding of Gui-Guang network. The operating expense rate of 3Q22 is relatively stable, and the sales rate, management fee and R & D rate are lower than the same period last year, respectively, 0.3ppt, 0.2ppt and 0.1ppt. During the period from August 29, 2022 to September 26, 2022, the company reduced its holdings of 4.1 million shares of Guizhou Network through centralized bidding, with a transaction value of 50.76 million yuan, and the investment income of 3Q22 Company was 67.99 million yuan, and the share price of 3Q22 Guiguang Network rose greatly, and the company also recorded a fair value change profit and loss of 187 million yuan. Excluding non-recurrent gains and losses such as investment income and net income from changes in fair value, 3Q22 deducts non-return net profit of 48.14 million yuan, which is higher than the same period of last month.
Pay attention to the commercialization progress of radio and television 5G business, the company's business technology innovation and business model need to be broken through.
In 2022, the company focused on "National CATV Network Integration and Integrated Development of Radio and Television 5G Construction"
The main line of work, the implementation of radio and television 5G construction and business preparation work, and take the lead in realizing the trial operation of radio and television 5G service. We believe that in the long run, resource integration and business upgrading in the radio and television industry are expected to continue to advance, "national network integration" or accelerate radio and television 5G network construction and 5G application maturity. We suggest that we should pay attention to the commercial progress of 5G in the radio and television industry and the development space of the company's new business related to 5G.
Profit forecast and valuation
Taking into account the combined impact of repeated outbreaks in various parts of 4Q22 and more effective cost control of the company, we reduced revenue by 5.1% to 2.495 billion yuan, raised net profit by 28.7% to 373 million yuan in 2022, and maintained the net profit forecast for 2023. The current share price corresponds to 27.1 times 2023 price-to-earnings ratio. Maintain a neutral rating and target price of 9 yuan, corresponding to 33 times 2023 price-to-earnings ratio, which has 20% upside compared to the current stock price.
Risk.
The epidemic repeatedly exceeded expectations, the commercial progress of national network integration and radio and television 5G was lower than expected, industry competition intensified, and the loss of users increased significantly.
