Core viewpoints

Event: the company released its 2016 performance KuaiBao. In 2016, the company achieved operating income of 3.082 billion yuan, an increase of 7.83% over the same period last year. Its net profit was 602 million yuan, an increase of 12.85% over the same period last year, and EPS was 0.42 yuan, an increase of 5.00% over the same period last year.

Our view.

Three major strategic drivers, steady growth of performance

Under the guidance of the company's three major strategies of "new network + application", "new media + content" and "big data + development", vigorously promote the development of various businesses to increase income and interest income, such as pay channel business, interactive TV business, Internet business, Internet TV business and group broadband network business, and the company's performance has increased steadily.

Be optimistic about the injection of group assets

According to the Circular of the General Office of the CPC Zhejiang Provincial CPC Committee and the General Office of Zhejiang Provincial people's Government on speeding up the Integrated Development of Radio and Television Cable Network "one Province, one Network" issued on August 23, 2011, Zhejiang Network Integration is based on Huasu Group, with the joint participation of provincial, municipal, county (city, district) radio and television broadcasters. Set up a provincial radio and television network company "Zhejiang Huasu Radio and Television Network Co., Ltd.". By further promoting the capital integration of "one province, one network", the province's radio and television cable network assets will eventually join Zhejiang Huasu Radio and Television Network Stock Cable Company and be in line with the capital market.

On August 28, 2012, Huasu Media completed its backdoor listing. In order to further protect the interests of minority shareholders of future listed companies and avoid potential inter-industry competition with listed companies after major asset restructuring, the company's controlling shareholder Huasu Group promised: in line with the relevant national policies, Huasu Group will place the assets and businesses that have been integrated and held by Zhejiang Network into the listed company in an appropriate manner within five years after the approval and implementation of this major asset restructuring. The specific mode of transaction depends on the specific conditions of the listed company and the placed assets at that time.

Up to now, the company has 2.5 million cable TV subscribers. The scale of CATV users of Zhejiang Network is 13 million, and most of them have not yet carried out in-depth operation. after integration in the future, it is expected to continue to improve the ARPU value of users by virtue of the capital market.

Maintain a "buy" rating

It is expected that the Internet TV industry will break out in 2017, and the company will continue to maintain its leading position in the Internet TV business; the company's current share price is relative to the private offering price of 22.8 yuan, which has a certain margin of safety; in 2017, the company has the expectation of asset injection, the company's performance and user base will be greatly improved, and the "buy" rating will be maintained.

Risk hint

Policy regulatory risk

The development of the industry is not as expected.

The content pattern has changed

The terminal pattern has changed