Summary of the report:
As a veteran of the live broadcast industry, the company has been leading the industry by taking the advantage of PC products. In 2016, the company successfully completed its transition to the mobile live broadcast market, with revenue and profits reaching record highs, with net profit reaching 233 million yuan, an increase of 54 percent over the same period last year. This indicates that the company is ushering in a new round of leap.
The performance of live broadcast business has soared, and the four major advantages support sustainable development. The company currently has 10 platforms, including 5 mobile APP represented by Crystal Live and Meow, and 5 PC social video communities represented by 9158 and Sina SHOW.
1. The advantages of diversified products complement each other and the market share is expected to increase significantly. The company's mobile products implement mass operation, PC products attract heavy users, and two-wheel drive accelerates user growth.
two。 Unique play to lead the industry, effectively enhance user activity and stickiness. Many-to-many model and family model are highly interactive, which effectively shape the attractiveness of the platform and stimulate the increase of user payment rates.
3. Clear business model and market positioning, strong sustainability of revenue growth. The company sets up a multi-level distribution model to promote revenue; locate three or four cities, save costs, and have broad prospects for development.
4. Legal compliance to engage in live broadcast business, multiple firewalls effectively reduce risk.
Other businesses have made efforts in many ways, and the industrial layout has been upgraded in an all-round way. The company provides high-quality social mobile games, resulting in synergy with the live broadcast business; proposes a financial technology strategy to invest in a number of Internet financial companies; and accelerates the pace of international expansion to fully penetrate the global product market.
Profit forecast and valuation: the mobile live broadcast market brings huge profit margins. As a leading enterprise with four core competencies, the company's market share and user payment rates are expected to continue to increase, driving revenue and profits to a new high. We expect the company's operating income from 2017 to 2019 to be 11.6 shock 14.1 / 1.49 billion RMB respectively, and the EPS will be 0.26 shock 0.30 plus 0.32 RMB, respectively, and the corresponding PE will be times that of 20-17-16. We give the company a six-month target price of HK $7.9 and a "highly recommended" rating for the first time.
Risk tips: slower growth of payment rates; weaker bargaining power with distributors; volatility of investment returns; exchange rate risk of Hong Kong dollar and RMB
