Investment highlights:
Diwei Video's main investment logic lies in laser display volume, IDC cost advantage, and big data mining. The market may be concerned about slow growth in 12-14 and the management team's lack of execution. We believe that the company has long been aware of the limitations of its main business, so it has been expanding its business around the edge of traditional business, ultimately positioning itself in the laser display, IDC, and big data business. We believe that the three core logics of the company's fundamentals have not changed, and are being verified and implemented one by one.
The laser shows the beginning of volume, and A-shares are scarce targets. Large-scale sales of the company's laser display movie projectors and engineering machines began in the third quarter, achieving sales of nearly 20 million. At the same time, research and development of the 200-inch rear-projection cabinet prototype was completed. It is expected that research and development of a 6,000 lumen single DLP all-in-one and a 12,000 lumen 3DLP all-in-one prototype will be completed by the end of the year. The company's laser display product market is expected to expand fully in the future. The company is expected to sell 100 units in 2015, with revenue of 50 million yuan based on an average price of 500,000 yuan/unit; in 2016, 500 units were sold, with revenue of 250 million yuan.
It is expected that the IDC business will achieve phased results next year, combining the three advantages of low electricity cost, low policy cost, and low cost of optical fiber leasing, and will further develop SaaS big data business in the future. The company's IDC data center is located in Ordos. Regional electricity prices can be as low as 0.2 yuan/kwh, while electricity prices in cities such as Shanghai reach 0.8 yuan/kwh. Diwei Video signed an exclusive use agreement with Chengyi Era for the backbone network. It is estimated that Diwei Video's leasing of this network will reduce the average monthly traffic cost generated to 22,000 yuan/g, while the industry average cost is around 100,000 yuan/g. In the future, companies are more likely to use IDC-based data to target SaaS-level big data mining and operation business. It is estimated that in 2016, the company will have 8,000 cabinets, revenue of 624 million, the main business will account for 40.67%, and achieve gross profit of 250 million.
Maintain profit forecasts and restate the “buy” rating. The company's revenue for 2015-2017 is estimated to be 65,1,534,2,084 million yuan, net profit of 0.28, 2.48, 365 million yuan, and earnings per share of 0.09, 0.83 and 1.22 yuan. The current stock price corresponds to the 2015-2017 PE being 272, 30x, 20x. In 2015, the company relied on the smart city business to turn a loss into a profit. In 2016 and 2017, due to the high flexibility of laser displays and IDC business performance, it is expected that the value of IDC data will be further explored in the future, giving the company a target market value of 10 billion dollars for the next 6 months.