Main points of investment
Financial expenses are a drag, and the growth rate is slightly lower than expected. In 2016, the company's revenue was 1.34 billion yuan, up 19.68% from the same period last year; the net profit from home was 229 million yuan, up 64.05% from the same period last year; and the net profit from non-return was 218 million yuan, up 74.88% from the same period last year. In the first quarter of 2017, the company's revenue was 241 million yuan, an increase of 72.70% over the same period last year, and its net profit was 32.56 million yuan, an increase of 118.84% over the same period last year. In 2016, Datang brilliant, Qianyi Zhicheng, value still interactive, Xinhua Pioneer achieved a total net profit of 330 million yuan in 2016, financial expenses reached 82.51 million yuan as a drag on performance, and the performance growth rate was slightly lower than expected.
Film and television business to maintain growth, looking forward to the value of IP reserves. In 2016, Datang achieved revenue of 496 million yuan and a net profit of 161 million yuan. Works released include "Rookie attack", "Police Flower and Police Dog" and "Marriage like Jade". In 2017, key works include "parting at the next stop", "here comes the Police Dog" and so on. In terms of films, Central and South China Pictures participated in films such as "my War" and "the Hunter" in 2016, and the company will continue to promote projects such as "touching Gold" and "unforgivable" in 2017. In 2016, Xinhua Vanguard achieved an income of 79.79 million yuan and a net profit of 38.3991 million yuan. At present, the company has heavyweight IP reserves such as "Happiness can wait" and "Feng Wu Weiyang: Lu Zhanchuan 1-4". The future in-depth development of IP is worth looking forward to.
Game strength continues to strengthen, with the help of mango to strengthen their own business. Value still interactive reporting period to achieve a net profit of 99.36 million yuan, over-completion of performance betting, its only generation and intermodal transport games including "Pokemon reproduction", "Little three Kingdoms" and so on; the company acquired the page game developer Aurora Mobile Limited network in 2017, its 2017 key games include "Journey to the West", "draw the cup of rivers and lakes non-stop", "immortal King" and so on, the strength of the game plate has been continuously strengthened. In addition, the company continues to promote cooperation with Mango and participates in the Mango Video Incubator Fund. In 2017, the company will continue to strengthen cooperation with the mango ecosystem to strengthen its own layout through investment. at the same time, the use of ecological resources to strengthen their own artist training, film and television distribution, games and other businesses.
Transfer the traditional manufacturing business and introduce core executives to build the "Central South Entertainment Empire". In the first quarter of 2017, the company announced that it planned to transfer manufacturing-related assets, creditor's rights and liabilities, and personnel to the wholly-owned subsidiary Zhongnan heavy Industry; the controlling shareholder announced the issuance of 1 billion yuan of exchangeable bonds, and we believe that the asset transfer and the issuance of bonds by the controlling shareholders have made relevant preparations for the company's next step in divesting the traditional main business. In 2017, the company introduced Hong Tao, the former general manager of Happy Blue Ocean, as the general manager of the company. at present, the company has upstream IP and artists, as well as strong partners such as film and television, games and mango. In the future, the company will continue to build a "Central South Entertainment Empire" by means of endogenesis and extension.
Risk factors. Asset integration risk; industry competition and policy risk; core brain drain risk.
Profit forecast, valuation and investment rating. After the company Aurora Mobile Limited network acquisition will merge the table and introduce it to the core executives, we expect that the company's IP and artist resource value will continue to generate revenue through the cash matrix such as film, television and games. Taking into account the rapid increase in the company's financial expenses, we slightly downgrade the company's 2017-2018 preparatory test EPS forecast to 0.56 soybean 0.68 yuan (the original forecast is 0.62 trillion 0.74 yuan), and add 0.78 yuan to the 2019 EPS forecast. The current price is 14.6 yuan, corresponding to 2017-2019 PE is 26-22-19 times, maintaining the "buy" rating.
