Events:

Huawen Media announced that the total amount of funds to be raised in this offering will not exceed RMB 3.9154 billion, and the number of shares issued to no more than 10 specific targets shall not exceed 241.990112 million shares.

Comments:

Define the strategic direction more clearly and create an "Internet video life circle". The 3.9154 billion yuan raised is mainly invested in three areas: mobile video projects (1.076 billion yuan), Internet TV projects (1.2134 billion yuan) and film and TV drama production and procurement projects (1.626 billion yuan). The core of these three projects is user-centered, focusing on creating an "Internet video life circle" so that they can enjoy excellent video content in both mobile and home scenes. At the same time, it can also give full play to the existing business advantages of Huawen Media, and the company already has rich video resources, animation content, game content, educational resources and e-commerce resources. it can give full play to the advantages of content and application in the creation of "Internet video life circle".

Mobile video business acquires Guoguang Huabing, join hands with Yongxin Shibo to build a "video cloud". The company's existing mobile video business is mainly concentrated in the video base of China Mobile Limited, China Unicom and China Telecom Corporation, covering mainly 3G/4G mobile operator users. With the popularity of a large number of hot spots of Wi-Fi across the country, the number of users who watch videos online through Internet Wi-Fi in public places is growing rapidly. Guoguang Video can expand the company's mobile video business to Internet Wi-Fi users by transferring its stake in Guoguang Huabing and increasing its capital. It is intended to fully cover the mobile population in factories, schools, hospitals, high-speed rail, ships and other areas. To meet the needs of the aforementioned mobile crowd to watch video fluently anytime, anywhere. At the same time, the company will join hands with Yongxin Shibo to develop customized professional mobile video cloud terminals and build a video cloud platform. Yongxin Video Bo is a leader in China's digital TV industry, with a technical R & D team from Tsinghua University. With its technical strength, Yongxin Video can cooperate with Guoguang Video from the technical aspects of signal transmission and video content operation, together from the project's video cloud terminal research and development, front-end system support to follow-up technical transformation. Provide full support for the project from platform construction, signal transmission, to local resource organizations, and then to business operation and management.

Hold hands with Dahua Intelligence, complement the terminal link, and build an Internet TV ecological circle of "content + platform + terminal + application". Dahua Intelligence, a domestic listed company, has just acquired Jin Ruixian, the world's leading provider of integrated video and audio solutions, and has a strong technical advantage in the design and research and development of Internet TV terminals. Global Zhida's main business is the R & D and sales of "CAN" Internet TV terminal products and other supporting terminal products. Global Zhida's terminal series mainly includes "CAN" series of Internet TV terminals, "super" cloud box and "super" sound bully three product categories. The cooperation with Dahua Intelligence enables the company to make up the terminal manufacturing link and build the whole platform of "content + platform + Terminal + Application". In terms of content, on the one hand, the company gathers the content of Youku Tudou, Letv, Tencent and Tianmai Juyuan in the video content, on the other hand, it adds content resources through this fundraising project. In application, the company already has games, e-commerce, education, music and other applications, at the same time, as one of the "seven license parties", the company has a higher threshold in building the platform.

Strengthen content production and procurement, enhance content advantages, and set up joint ventures with Hairun Film and Television, Youpengpule and Wuzhi Digital. In this fund-raising project, film and TV drama production and procurement account for the largest proportion, accounting for 1.626 billion yuan. Through all-round cooperation with Hairun Film and Television, Youpengpule and Dance Digital, to set up a joint venture to purchase and produce film and TV dramas and other characteristic video content to strengthen the accumulation of the company's video content resources, and through the operation of film and television resources to strengthen the relationship between the company and partners. Jointly seize the entrance for "mobile video" and "Internet TV". Youpenpule is the leading Internet TV operation service provider in China, which has covered about 16 million Internet TV users and nearly 6 million monthly active users. In the next few years, Youpengpu aims to cover more than 50 million Internet TV users, and the number of monthly active users will also exceed 20 million. Hairun Film and Television is the leader of film and television production, and its representative works include "never close my eyes", "Jade Guanyin", "what to Save you and my Love", "a pair of embroidered shoes", "one meter of sunshine", "shining sword" and so on. Wuzhi Digital is an animation production company specializing in animation contract manufacturing and original animation IP incubation. In terms of animation contract manufacturing, he has accumulated five large-scale animation film production experience, including "Sail 2" (2012), "Sail 3" (2013), "Magic Brush Ma Liang" (2014), "Sail 4" (2014) and so on.

With the promotion of the reform of state-owned cultural enterprises, the company is expected to get strong resource support from major shareholders. The company has the shareholder background of China Radio International. Radio International is the media with the most global information collection and communication coverage in China. It has 95 overseas city stations and broadcasts in 43 languages every day. It covers more than 60 countries and regions, 12 overseas broadcast Confucius classrooms, 18 global network stations, 40 overseas press stations and terminals, and 4112 overseas listeners' clubs. Radio broadcasts more than 3000 hours of programs every day, and it is the only one of the seven integrated licensees that can cover overseas. Huiyin Aofeng, a strategic investor introduced this year, is a fund management company of Guangzhou Industrial Investment Fund Management Co., Ltd. Guangzhou Fund is an industrial investment and financing platform specially established by the Guangzhou Municipal Government to promote industrial transformation and upgrading, amplify the guiding effect of financial funds, activate social investment, and strengthen the status of a regional financial center.

Maintain the recommended rating. It is predicted that the net profit attributed to the parent company from 2015 to 2017 is 1.268 billion, 1.43 billion and 1.66 billion respectively, EPS is 0.62,0.70 and 0.81 yuan respectively, and the corresponding share price PE is 17.1,15.2 and 13.1 times. In view of the prominent value of the company's all-media platform and the broad future of the company, the current company has been undervalued with reference to the segment valuation of international media companies and A-share media companies. Maintain the company's "recommended" rating.

Risk factors: (1) the implementation of the company's development strategy is not up to expectations, the company's all-media platform failed to play a role, extension acquisition integration is not up to expectations; (2) the risk of decline in the original business; (3) the liberalization of the company's monopoly media license resources leads to the risk of weakening the company's advantage in the industry.