Summary of the report:
Comments:
The traditional radio and television business remains stable. The company released a report for the third quarter of 2016 that in the first three quarters of this year, the company achieved operating income of 1.497 billion yuan, down 1.03% from the same period last year, and net profit of 235 million yuan, down 18.4% from the same period last year. The company's operating income and net profit in the first three quarters of this year decreased slightly compared with the same period last year, but future business expectations remain basically stable, mainly relying on the company's mature technology and quality services, as well as good customer loyalty in Jilin Province. As of June 30, 2106, the company's cable TV network covers 7.065 million users, with a coverage rate of 78%. Among them, the urban network covers 4.89 million households, with a coverage rate of 97%; the rural network covers 2.17 million households, with a coverage rate of 54%. The coverage rate of the urban network is very high, and there is still much room for improvement. The total number of cable TV subscribers in the company's network is 5.32 million, with an occupancy rate of 77% and a digitization rate of 98%. The company has a total of more than 1 million two-way business users.
The informationization of education has become a new direction of the company's development and has a broad market prospect. Jilin TV Media will vigorously develop the business in the field of educational informatization in order to meet the needs of the construction of educational information platform and advantageous educational service platform in Jilin Province. The educational information service includes not only the 10-gigabit education network for the Department of Education, the Bureau of Education, the educational authorities and schools, but also the web-based courses for students' families. The content of online courses mainly includes live courses, interactive links, on-demand courses, etc., the course content is mainly aimed at primary and secondary school students, and plans to expand to higher education, vocational education, continuing education and other fields in the future. The profit sources of the project mainly include education network fees, information service fees and provincial and municipal financial transfer payments. At present, the project has been piloted in some schools in Baishan District and Changchun City and has passed government acceptance, and will be gradually put into operation, and is expected to be completed in the fourth quarter of 2017. There are about 7000 schools and educational management institutions in Jilin Province, and if all the coverage is completed, the company's future revenue will increase significantly. The forestry information management project is authorized by the government and will become another part of the business income. According to the needs of forestry safety monitoring, forestry resources protection and animal and plant ecological maintenance in Jilin Province, Jilin TV Media takes the forestry resources information management service as its main development direction in the future. The company issued an announcement on September 24, 2017 and has been established as the general contractor of the "Provincial Joint Construction demonstration Project of the Bureau of Modernization of State-owned Forest Management". The information management of forestry resources will be connected through the network, through wireless and wired coverage, and the management and monitoring mode of the combination of satellite, UAV and ground sensing equipment will be adopted to return the collected information to the forestry platform for big data analysis. Will charge according to the coverage, through "enterprise construction and operation, government purchase services" and other ways to obtain business income. The market launch is expected to be completed within 1-2 years, and the total investment is estimated to be 864 million yuan. We judge that this business can bring a good increase in operating income to the company.
The development trend of Huitong science and technology project is good. The Huitong Science and Technology Project has successfully developed a "10 Gigabit data processing chip" based on the "I-PON" standard, which uses the latest optical fiber technology to realize optical fiber transmission from the access end to the input end, with faster transmission speed, larger information carrying capacity and stronger anti-interference. We expect that this technology will bring stable business orders to the company, which is expected to reach about 500000 units, which is expected to become a new growth point of revenue.
Other businesses: real estate and financial sectors have a good return on investment and make a positive contribution to revenue. While developing its main business, the company aims at market timing and invests in finance and real estate. Investment in the real estate sector is expected to recover costs and gain benefits, and investment in the financial sector has also achieved a relatively ideal return. The company's other businesses are generally developing well and are expected to make a positive contribution to the company's revenue.
Profit forecast and valuation: the company's in-depth layout in the field of "Internet +", increase investment in information project construction, we judge that the company's future revenue will have a better performance. It is estimated that the company's EPS for 16-18 years will be 0.15,0.22,0.24 yuan respectively, and the current stock price will be rated as "overweight" corresponding to PE of 28,19,18.
Risk hint: the risk of slow informatization process, and the company's transformation and upgrading falls short of the expected risk.
