I. Overview of events
Recently, Tongzhou Electronics released its 2013 annual report: during the reporting period, the company achieved revenue of 1.956 billion yuan, down 7.14% from the same period last year; net profit belonging to shareholders of listed companies was 34 million yuan, down 74.64% from the same period last year; and basic earnings per share was 0.05. deducting non-earnings per share is 0.02 yuan. In addition, the company expects net profit from January to March 2014 to range from-45 million yuan to-35 million yuan. The equivalent income per share is-0.05 yuan ~-0.07 yuan.
II. Analysis and judgment
The performance was revised, revenue decreased by 7.14% and net profit decreased by 74.64%.
1. Performance revision. (1) the reasons for the decrease in performance are as follows: due to the intensification of market competition, the unit prices of satellite TV set-top boxes and cable TV set-top boxes have decreased, and the gross profit margin of domestic set-top boxes has dropped by about 30.4 percentage points; out of the principle of caution, the company has adjusted the accounting method of "75 million yuan of incentive funds for high-tech industry support by the Management Committee of Jingzhou Economic and technological Development Zone". (2) the business growth is as follows: satellite TV user terminal equipment (- 35.8%), cable TV access equipment (- 4.3%), other equipment (67.1%). (3) the proportion of revenue from each business is: satellite TV user terminal equipment (24.0%), cable TV access equipment (58.7%), and other equipment (17.3%).
2. The company's comprehensive gross profit margin decreased by 1.50 percentage points to 26.12% compared with the same period last year. The decline in comprehensive gross profit margin is mainly due to the intensification of competition in the domestic set-top box market. The contribution rates of each business to the overall gross profit are as follows: satellite TV user terminal equipment (6.06%), cable TV access equipment (15.12%), and other equipment (5.57%).
3. The rate of expenses for the period increased by 3.77 percentage points over the same period last year to 24.68%. In 2013, the sales expense rate, management expense rate and financial expense rate were 9.33%, 12.61% and 2.74% respectively, an increase of 2.06%, 2.38% and 0.66% over the same period last year.
The company transforms into an Internet company and expands its DVB+OTT business
1. During 2013, the company launched an intelligent set-top box terminal of "DVB+OTT" mode to cable TV users on the basis of creating a new technology "touch and see". At present, the company has signed cooperative operation agreements with Northern United Radio and Television Network Co., Ltd., Gansu Radio and Television Network Co., Ltd., Guizhou Radio and Television Information Network Co., Ltd., and launched business pilot projects in Liaoning and Guizhou, and technical preparation work in other regions is already under way. We believe that the company has the potential to grow into a "OTT platform company" in the radio and television field, and the follow-up will mainly focus on the growth of the company's "DVB+OTT" users.
2. The company has achieved cooperation with Guoguang Oriental and Youku Tudou, which will speed up the rapid landing and development of TV Internet business, and jointly promote the development and operation of OTT TV Internet applications based on "mobile phone, TV, PAD" and other intelligent terminals.
3. In early 2014, the company acquired Shenzhen Quanzhida Communication Co., Ltd. with independent intellectual property rights of smartphone operating system, software development platform products and development capabilities (960 secure operating system brand, 960 dual-system autonomous immune mobile phones). The company will take advantage of the 4G opportunity to rapidly expand sales, enhance user reputation, and occupy the entrance to the mobile Internet.
Third, profit forecast and investment suggestions
In 2014, the company will focus on cultivating TV Internet products and services, promote DVB+OTT business in a planned and step-by-step manner, and accelerate its transformation into an Internet company by seizing access to the mobile Internet and implementing 1x1 TV Internet services. From 2014 to 2016, the EPS is expected to be 0.16,0.23 and 0.31 yuan respectively, with a "cautious recommendation" rating of 75x, 52x and 39x for the previous share price PE. IV.
Risk tips: 1, market competition risk; 2, policy risk; 3, international trade risk; 4, product delivery risk; 5, tax preferential policy change risk.