Event: Huangshi Group released three quarterly results: from a single quarter, the company achieved operating income of 494 million, an increase of about 31% over the same period last year; a net profit of 31.73 million yuan, an increase of 71% over the same period last year; and earnings of 0.04 yuan per share in a single quarter, an increase of 63% over the same period last year. From the first to third quarters, the company achieved operating income of 1.595 billion, an increase of 52% over the same period last year The net profit of returning to the mother was 133 million, an increase of 76% over the same period last year, and earnings per share was 0.16 yuan, an increase of 67% over the same period last year.
The effect of asset integration is becoming more and more obvious. Since 2014, Huangshi Group has been promoting "Dairy + Media".
The dual-main business development model has successively acquired a series of high-quality assets such as Yujia Film and Television, prosperous Sun, perfect online and so on. In the first three quarters, the company's profitability improved significantly, and the gross profit margin of 2016 gradually increased every quarter (26%, 30% and 32% respectively in the first three quarters).
Look at the strategic layout of Huangshi Group from the perspective of platform ecology. Judging from the current situation, the Royal Group is committed to building an integrated ecosystem of child care services by integrating a number of services: 1) content providers represented by Yujia Film and Television and Sunshine; 2) Institution channels represented by participation in service institutions such as Bihai and Yinfan; 3) video broadcasting business represented by investment in Yi Lian Video; 4) Financial Services business represented by perfect online 5) e-commerce and healthy eating business based on traditional main business; 6) content broadcasting business to integrate multiple broadcast channels; 7) platform traffic management business promoted by cooperation with 360and 8) including the company's layout in smart wear, smart devices and mobile parent-child APP. We believe that the study of Huangshi Group should measure the value of its platform strategy from the perspective of interaction and cooperation among all assets, as well as the sense of full service experience and stickiness to users.
Profit forecast and investment advice. It is estimated that the EPS from 2016 to 2018 is 0.49,0.74 and 0.92 yuan respectively, and the corresponding PE is 35, 23 and 19 times. Considering the future of the company: 1) the expectation of further asset integration is strong; 2) the synergy of various types of assets will be further revealed in 2017; 3) the value of the child care service platform will be gradually recognized by the market. We maintain the "Buy" investment rating of the Royal Group.
Risk hints: the risk that dairy products decline more than expected, and the risk that asset integration is less than expected.