Events:
(1) the company has increased its capital by 400 million yuan to the wholly-owned subsidiary Variety Technology.
The company plans to use cash to increase the capital of Variety Technology, a wholly owned subsidiary of the company, by 400 million yuan. After the capital increase is completed, the registered capital of Variety Technology will be increased to 700 million yuan. This capital increase of Variety Technology can speed up the speed of Variety Science and Technology to build a mobile Internet platform.
(2) Variety Technology controls Beijing Wonderland and other Internet lottery companies by means of capital increase and acquisition. Variety Technology has increased its capital to Beijing Wonderland by 50 million yuan and obtained a 25% stake in Beijing Wonderland. At the same time, Variety Technology will hold a total of 51% of Beijing Wonderland with 52 million yuan of the total equity held by its original shareholders. In addition, Variety Technology also transferred 55 per cent of Shanghai Lottery at 71.8 million yuan, 55 per cent of Shanghai Haoxuan at 21.5 million yuan and 60 per cent of Beijing Yingcai Changlian at 163.89 million yuan.
With the transformation of mobile Internet, the layout of Variety shares industry chain tends to be perfect.
The company began to seek a transition to the mobile Internet in 2013, set up a variety technology subsidiary at the end of last year, and acquired handheld Flying Communications, a mobile game company, in January this year. This series of acquisitions is the second step in the transformation of its mobile Internet, starting to lay out the Internet lottery industry chain.
The company acquires four lottery-related companies: Shanghai Lottery, which is engaged in wholesale business, Beijing Yingcai, which is engaged in retail business, Shanghai Haoxuan Company, which is engaged in lottery analysis software development, and Beijing Wonderland Company, which has a good cooperative relationship with operators. At this point, the company tends to improve the layout of the Internet lottery industry chain.
Profit forecast and valuation
It is estimated that the EPS of the company from 2014 to 2016 is 0.26,0.43 and 0.53 yuan respectively, corresponding to 40 times, 24 times and 20 times PE respectively.
Risk hint
The market promotion is lower than expected and the acquisition integration is lower than expected.