Brief comment on performance
In the first three quarters of 2016, Wanjia Culture achieved an operating income of 533 million yuan, an increase of 248.95% over the same period last year, a net profit of 69.5405 million yuan, an increase of 499.58% over the same period last year, and a net profit of 61.2138 million yuan, an increase of 460.70% over the same period last year. The main reason for the sharp increase in the company's performance compared with the same period last year is that the wholly-owned subsidiary Xiangtong Animation merged in August 2015, and major changes have taken place in the company's main business and business scope in the same period. Business analysis around the pan-two-dimensional industrial chain careful layout, the formation of animation, e-sports two-wheel drive model: following the company's successful acquisition of Xiangtong animation in 2015, and the establishment of ten thousand e-sports, the company has gradually achieved in-depth penetration of the pan-two-dimensional (e-sports, entertainment, animation, games) industrial chain, thus promoting business diversification and forming the performance dual-drive effect of "animation + e-sports".
As one of the first enterprises to carry out mobile Internet animation business in China, Xiangtong Animation is the core partner of the animation business of the three major operators. Animation products accumulatively visit more than 1 billion users and order more than 80 million users; in the animation IP reserves, Xiangtong Animation continues to expand its IP image resources. As of June 2016, including mung bean frog, Kuba bear, cute bear and other well-known images, Xiangtong animation has more than 1000 animation images IP, further consolidating its market position in the animation field. The exclusive agent released the game "Pig Lai" in Taiwan to achieve the results of iOS and Android Game list TOP1 for several weeks in a row, establishing a dominant position in the game distribution stage.
E-sports of Wanjia is positioned as a content provider of e-sports and two-dimensional video, brokerage and competitive mobile games, and has signed cooperation agreements with AcFun, Youku Tudou and Chunqiu Yongle Culture. In the first half of 2016, e-sports released two products, "Heart beating Warriors" and "Kyushu unparalleled". At the same time, as a self-developed S-level RTS mobile game, "Ember Wars 2" has won Youtu Group's exclusive agency rights and interests in Chinese mainland, with a cumulative contract of more than 10 million yuan. On the other hand, e-sports won the exclusive R & D and IP agency rights of the first brand of constellation consumer culture, "Tongdao Uncle" to eliminate stand-alone games and "Tongdao Uncle" nurturance games. At the end of June 2016, the company's female group Astro12 officially returned to China to prepare for its debut and music distribution in Chinese mainland, and will develop diversified profit models relying on the company's business advantages in the future.
It is proposed to acquire two well-known anchor brokers and business operation companies in the field of e-sports, so as to enrich the company's business structure and deepen the layout of the cultural and entertainment industry. In July 2016, the company announced the transaction plan to acquire 100% equity of Longlin Network and 100% equity of Kuaiping Network, a well-known brokerage and business operation company in the field of e-sports. Longlin Network, relying on the famous e-sports anchorman and e-sports content production as the core, forms a business model of "brokerage content", maintains a good cooperative relationship with the main domestic live broadcast platforms, and pays attention to professionalism in anchor training. The company's anchors cover live streaming platforms such as DouYu International Holdings Limited and Panda, while live broadcasting includes a wide range of mainstream competitive games, including "League of Legends", "World of Warcraft", "Dota2", "Watchman Vanguard" and so on. The main business of the fast screen network includes e-sports anchorman training and brokerage and e-sports portal operation business, creating a "brokerage + platform" business model; the company anchors pay attention to entertainment, oriented to the direction of entertainment variety, established a sound anchor training system, and set up a training base; at the same time, set up e-sports information portal-E-Competition Tiger, to create e-sports media platform. After the completion of the acquisition, the two companies will form a good synergy with the original business of Wanjia Culture, and develop in an all-round way in e-sports content production, women's group business, animation business and so on. Investment advice and valuation
We estimate that the net profit of 2016E, 2017E and 2018E companies will be 173 million, 271 million and 300 million respectively, regardless of the dilution effect of subsequent share issuance, the corresponding EPS will be 0.273 yuan, 0.426 yuan and 0.473 yuan. Taking into account the company's proposed acquisition of two well-known e-sports anchor brokers and business operators, will form a good synergy with Wanjia e-sports and Xiangtong Animation; Wanjia Appliance Competition's women's team, variety and other businesses will enter the project landing phase, as well as the company's layout in e-sports industry will be gradually improved; give the company 27.30 yuan list price, corresponding to 100X16PE, 64X17PE, give the company a "buy" rating. Risk
There is a risk that the two targets to be acquired will not pass.
Competition in e-sports industry intensifies
The consolidation of the acquisition company is not as expected.
