Investment highlights:
The downturn in traditional media had an impact, and the company's main business began to come under pressure
In recent years, traditional newspapers and television media have been severely impacted by the Internet and mobile Internet media, and key indicators such as the circulation volume of related newspapers and TV ratings have all experienced a clear continuous decline. Relatively speaking, since the company's assets are of high quality, its influence by the industry is limited. Judging from operating performance, the company's communications and cultural business, which includes Huashang Media, Times Media, and Guoguang Glory, earned 1,209 billion yuan in the first half of 2016, down 12.43% year-on-year from 1,381 million yuan in the same period in 2015. Revenue and gross margin both declined to a certain extent. We believe that the company has begun to carry out a considerable degree of transformation and upgrading in its traditional media business in the past two years. Among them, the brand activity business of Times Media, the exhibition economy/logistics and distribution/internet finance of Huashang Media, and Guoguang Glory's further channel sinking have effectively withstood the impact of the decline in the overall performance of the industry, so its overall traditional media business will continue to maintain a relatively stable development trend in the future.
Use the advantages of license plates, improve the small screen business, and seize the WiFi+ large screen market
Guangdong, the country in which the company has a stake, is one of the seven Internet TV broadcast control licenses. Furthermore, the brother company China TV Beijing is one of the operators of six mobile television integrated broadcast control licenses, so the company has a strong video license advantage. Judging from specific business progress, the company initially built a “smart ocean” mobile TV platform with satellites covering the seas of the Asia-Pacific region and has already begun deploying gateways on ocean ships to cover users. The Wi-Fi payment business has also begun comprehensive deployment work in scenarios such as hospitals and factories. In the field of Internet TV, the company's subsidiary Guangdong has gradually developed an overall strategic layout advantage from content to terminals. By building CIBN's independent core technology platform, the product “CIBN Good-looking” product “CIBN Good-looking”, launched, developed a big media platform, and carried out technical upgrades, achieved rapid autonomous core capabilities Accumulate.
Excellent qualifications, optimistic about the company's development in the long term
We believe the company brings together CRI's core high-quality assets. On the one hand, its traditional media business and other related assets operate steadily, providing strong performance support for the company's overall operation. At the same time, the “small screen+big screen” payment business developed by the company with the advantages of its license plate has strong room for development and has a relatively continuous and stable increase in performance. We continue to be optimistic about the company's future development potential. We expect the 2016-18 EPS to be 0.37, 0.42 and 0.47 yuan/share respectively, giving the company an “increase in holdings” investment rating.