Main points of investment
The growth rate was lower than the market expected. In the first half of 2016, the company achieved revenue of 3.495 billion yuan, an increase of 37.05% over the same period last year, and a net profit of 135 million yuan, down 8.50% from the same period last year. The revenue growth of the company is mainly due to the consolidated statement of advertising business and related extension, while the decline in net profit is mainly due to the increase in financial expenses and income tax expenses, and the growth rate of the company's performance is lower than market expectations.
The cable + advertising business develops steadily, and the investment management maintains the leading position. During the reporting period, the company's cable business grew steadily, with revenue of 1.181 billion yuan around the four key tasks of "two-way network reform, home box business, smart city and IDC construction", an increase of 3.29% over the same period last year. In terms of advertising business, revenue reached 1.863 billion yuan in the first half of the year, an increase of 60.83% over the same period last year. Among them, Yunhong Advertising made great efforts to expand new media advertising business such as Mango TV, iQIYI, Inc. and Tudou. At the same time, Hong Jiaze, media of high-speed railway station, has signed contracts of more than 100 million yuan. New customers include well-known enterprises such as Midea, Wanhe Electric Appliance and Lafang Group. In addition, during the reporting period, Dachen Venture Capital realized the buyback withdrawal of three projects, namely, Yujia Huaxun, Tuorui Medicine and WeChat, and realized three IPO projects of Fengyuan Chemical, Lianlong and Gibbit. so far, a total of 27 enterprises have been pre-disclosed through IPO, ranking first in the industry.
Create an integrated media content platform, and the layout of new media transformation continues to advance. During the reporting period, the company focused on building a media content platform integrating films, TV dramas and variety shows, which has been initially completed.
In the first half of the year, the company achieved 10.499 million yuan in film and television program revenue, and the company cooperated with Lionsgate Pictures to achieve global box office receipts of 496 million US dollars, such as "the Devil 2", "the Gods of Egypt", "prisoners" and "Choice". On the other hand, the company continues to promote the transformation of new media, realizing 209 million yuan in new media revenue, an increase of 1,825.93 percent over the same period last year. At present, the company's proposed acquisition of Anwo Media and Shanghai Jiuyou plan is still under implementation and is expected to land in the second half of the year.
Major shareholders to increase their holdings to show confidence, endogenous extension to create a new Internet media group. According to the company announcement in July 2016, the controlling shareholders of the company increased their holdings by a total of 18 million yuan, accounting for 16.66% of the company's equity after the increase. This increase shows that the major shareholders have strong confidence in the follow-up development of the company. In the future, through endogenous extension, the company is expected to pay attention to endogenous growth and create its own vertical entertainment ecology; on the other hand, it is expected to continue to acquire high-quality Internet new media targets and build Internet new media groups.
Risk factors. Macro-economic system risk; M & A process risk and M & An integration business management risk.
Profit forecast, valuation and investment rating. Taking into account the company's business development and extension-related progress, we maintain the company's 2016-18 EPS forecast of 0.52 to 0.62 cents, the current price is 17.20 yuan, corresponding to 2016-2018 PE is 33-28-24 times. In view of the leading position of the company's media in the reform and transformation of state-owned enterprises and relying on top resources such as Hunan Radio and Television and BABA, we maintain the company's "buy" rating.
