Media mergers and acquisitions ushered in "Dahua News" under the "Great era". Driven by the policy, the scale of mergers and acquisitions in the media industry has increased sharply since 2011. Huawen Media was formerly known as Minsheng Gas Group of Hainan Province. After Hainan Minsheng Gas Group acquired part of the shares of Chinese Business Media and its subsidiaries in 2006, it has been transformed from an energy enterprise into a newspaper-based media business and gas business enterprise. Since then, through a series of mergers and acquisitions, the company has continuously enriched media and content, built a technological platform, actively entered the field of new media, cultivated Internet and mobile Internet business, and has initially built the framework of media groups. in the future, we will continue to move forward along the road of mergers and acquisitions.
Embrace the mobile Internet and make great strides towards new media. In the 4G era, mobile video will break out, and the scale of paid video by operators is expected to exceed 10 billion in 2017. The company's acquisition of China Television Communications and Palm Yitong made use of its rich resources and operational experience in the field of mobile video to rapidly extend Huawen Media from newspapers, magazines, radio, Internet television and other media to the mobile Internet. it has greatly enriched the company's media resources. On the other hand, Guoguang Star is expected to be injected into listed companies at the right time.
Enrich the media and content and build a technical platform. The outdoor advertising screen of Jingshi Culture acquired by the company will become another content export of CIBN in the future, and building advertising will also become an important part of the whole case marketing of Huawen Media. The acquisition of Jingshi Culture is one of the important media strategic layouts for Huawin Media to cover users in full time and space. The company's acquisition of Chenghuai Technology and its entry into the field of online education is an important expansion of the content section. The acquisition of Bangfu Software will provide the necessary technical support for the company to expand in content and media. In the future, the communication media and content platform of Huawen Media will be further expanded and continue to advance along the development strategy of "all-media, big culture".
The enlightenment of News Corporation: strong mergers and acquisitions focus on layout, content channels take a two-pronged approach. Taking a comprehensive view of the process of M & An expansion of News Corporation for more than 60 years, we draw several important revelations: attach equal importance to content and channels in the process of M & A; pay attention to strategic layout and carry out strong mergers and acquisitions; actively embrace the Internet and layout new media. The strategic thinking reflected by Huawen Media in the process of M & An is similar to that of News Corporation in some aspects.
Profit forecast and investment rating: based on the total share capital of about 2.056 billion shares after the completion of this IPO, we estimate that in 2014-2016, the diluted EPS of the company's original business (mainly including Chinese Business Media, Times Media, Minsheng Gas and Guoguang Glory) is 0.43,0.48,0.52 yuan per share respectively; Manyou Culture and Table will thicken the EPS by 0.01,0.01,0.02 yuan per share respectively. The diluted EPS of Chenghuai Technology is 0.03,0.04,0.04 yuan per share respectively, while the new media business (mainly including GuoTV Communications, Palm View Yitong, Jingshi Culture and Bangfu Software) will thicken the EPS by 0.10,0.13,0.18 yuan per share respectively. To sum up, Huawen Media's diluted EPS in 2014-2016 is conservatively estimated to be 0.57,0.67,0.76 yuan per share, with a closing price of 13.36 yuan on September 9, corresponding to 23 times, 20 times and 18 times of PE, respectively, giving the company a "buy" rating for the first time.
Stock price catalyst: early release of acquisition assets; mutual verification of business integration and performance; asset injection; smooth progress of OTT TV business and mobile video business.
Risk factors: the process of additional issuance and acquisition may be lower than expected; the company's business system is huge, and whether it can integrate many businesses and resources and eventually move towards the media group remains to be verified and uncertain; the company's newly acquired business performance is not up to promise.