Announcement items:
On May 27, the company issued a series of announcements: it intends to increase the capital of its wholly-owned subsidiary Variety Technology by 400 million yuan in cash. Variety Science and Technology increased its capital by 50 million yuan to Beijing Wonderland and obtained 25% equity. After the capital increase, it invested 52 million yuan and transferred 26% of the original shareholders of Beijing Wonderland. Finally, Variety Science and Technology gained 51% control. Beijing Wonderland is mainly engaged in mobile application development and technical services, including mobile games and mobile lottery. Variety Technology, a company specializing in lottery technical services, transferred 55% of the shares of Shanghai Lottery Information Technology Co., Ltd. at a price of 71.8 million yuan. Variety Technology transferred 55% of the shares of Shanghai Haoxian Information Technology Co., Ltd. at a price of 21.5 million yuan. It is a high-tech enterprise committed to the field of lottery software. Variety Technology has acquired a 60% stake in Beijing Yingcai Changlian Network Technology Co., Ltd. at a price of 163.89 million yuan. Beijing Yingcai, founded in 2007, is the earliest company to carry out Internet lottery business in China, with a well-known brand in the lottery industry, "Lottery Big winner".
Increase investment in Variety Technology and create a mobile Internet platform: after the company's cash increase of 400 million yuan, the registered capital of Variety Technology will increase to 700 million yuan, greatly enhance the ability of business expansion, and actively build an interconnected mobile platform, which is in line with the company's strategic direction.
Acquire and control four lottery companies, build the whole lottery industry chain, and lay out the mobile Internet. Beijing Wonderland has obtained the operation and agency rights of telecom operators' lottery brands, including China Telecom Corporation's "Tianyi Lottery" and China Unicom's "Wo Lottery". Major telecom operators will push them uniformly through their own customized machines and corresponding platforms. Lottery users can purchase lottery tickets through platforms such as "Tianyi Lottery" and "Wo Lottery" developed and operated in Beijing Wonderland. And through bank cards, third-party payments, phone charges, points and other means of payment, Beijing Wonderland and telecom operators according to the signed specific business agreements for settlement Shanghai metering lottery has a good cooperative relationship with national welfare lottery and sports lottery units, and the paperless ticket business is at the leading level in the industry, with a turnover of 3 billion yuan in 2013. Shanghai Haoxuan is committed to lottery software and wholesale business. Shanghai metering lottery is one of its three most important customers. Beijing Ying Lottery is mainly engaged in online lottery sales at the retail end, and has a cooperation agreement with Shanghai Lottery, Sports Lottery and Welfare Lottery Center. its lottery co-buying generation ditch platform "Lottery Big winner" is one of the six major vertical lottery websites on the Internet in China, with a turnover of 1.36 billion yuan in 2013. After this acquisition, Variety shares have become the industry leader with the most complete layout of domestic lottery business and the most obvious advantages of backwardness, and provide an important customer traffic base and strategic partner for intensive cultivation of mobile Internet in the future.
Risk hint: market promotion is lower than expected and other risks.
Profit forecast and valuation. We estimate that the company's EPS in 2014-2016 will be 0.22 yuan / 0.41 yuan / 0.52 yuan respectively, maintaining the "overweight" rating.