Main points of investment:
Maintain the target price of 20.38 yuan and maintain the "overweight" rating. As the company's growth potential has shown a strong release trend, follow-up cooperation with Ventures, business diversification will further enlarge the performance growth space, we raise the company's forecast EPS for 2016-2018 to 0.31 shock 0.38 pounds 0.44 yuan (the previous value 0.25 pounds 0.30 pounds 0.35 yuan), maintain the target price of 20.38 yuan, maintain the "overweight" rating.
Performance summary: in the first half of 2016, the company achieved operating income of 1.287 billion yuan (+ 4.47%) and net profit of 109 million yuan (+ 25.63%), which was in line with our previous judgment that the company's growth would accelerate, but the actual growth rate was slightly higher than we expected.
The release of network potential shows a strong growth trend, which continues to thicken the fundamentals of the company. The growth of the company's performance in the first half of the year is mainly driven by data services based on superior network infrastructure. As the company's network construction has passed its peak, the incremental costs brought by large-scale value-added services such as broadband and interactive VOD are relatively small, and the trend that the company's net profit growth rate is higher than revenue growth rate is expected to continue. So far, the net profit of 2016Q1 and 2016H1 has increased by 8.62%, 16.68% and 25.63% in 2015, and the strong momentum of accelerated growth is expected to be maintained.
Internal reform and efficiency, external cooperation are achieving results, and the business is moving forward towards diversification. The company's in-depth promotion of the internal reform of "talking about heroes on the basis of performance and using capital means" has had an invisible positive impact on its own management. Cooperation with Zhan Investment has begun, and the performance increment brought about by copyright cooperation will be reflected gradually from the second half of the year. Red content production, film and television investment and other content business, follow-up cable and wireless integration pilot landing, will gradually promote the company's business structure from a single cable operation to financial media operation transformation, further increase the performance growth in the future.
Risk tips: slow expansion of new business, IPTV, OTT and other new media to intensify the risk of competition.
