Events:
The company disclosed that its new media company used its own capital of 4.8 million yuan to increase the capital of Wanjie Technology, and its shareholding increased to 7.186%.
We have a different view from the market:
We think that in the near future, we can pay attention to three bright spots of Guangdong media: (1) the cloud color network has entered the final testing period, and the professional information analysis ability builds product barriers, which is expected to achieve the first batch of docking with millions of readers of the "football lottery winner". The customer base is huge (2) the online frequency of the game is accelerated, and the expansion of the game industry chain is prospected. (3) the Champs Elysees is expected to merge successfully in 14 years, and the LED screen is the first to enter the era of "new screen interaction" with strong performance lock-in. According to the performance commitment, the EPS has increased by 0.08 yuan and 0.10 yuan respectively in 14-15 years; we believe that 2014 is the year of transformation of Guangdong media, and there are a lot of layout work in both the old and new media business. Although the profit contribution of related business is not high in 1-2 years, as long as the transformation process is in line with expectations, the establishment of the company into a comprehensive media group integrating distribution, print advertising and new media is just around the corner. We are firmly optimistic about Guangdong Media and maintain the "strong recommendation".
Main points of investment:
Increase investment in game companies to accelerate the expansion of the industrial chain. Wan will focus on the R & D and operation of online games and mobile games, focusing on the products "Fu Mu Lu", "biographies of chivalrous heroes", "Heroes" and "the True Story of Wulin". The company increased its capital by 4.8 million yuan in cash, causing the share of equity to rise to 7.186%. Although it has not yet reached the control level, it shows the company's determination to accelerate the expansion of the game industry chain. Most of the games of the target company have been online on the game platform of listed companies, so the capital increase action will help to improve the level of platform issuance agent business and enhance the core competitiveness of game business.
4 super popular ARPG log in to Guangyou platform, and the online frequency is accelerated in the later stage. Since obtaining the license in December last year, it has operated four super popular ARPG games Wuyi, Dark Dragon Slayer, Miracle coming and Biography of Chivalrous Heroes. Among them, the first two games are currently ranked 4th and 8th in the top 10, with monthly running water exceeding 10 million yuan, effectively accumulating popularity effects for the platform. Taking into account the rapid growth of the game industry, the company intends to increase investment in the game business sector, is expected to launch a large number of game products in the second and third quarters, revenue growth is expected.
The transformation is clear and the expectation of epitaxial M & An is high. From the strategic layout of the company, more and more resources are invested in the mobile Internet, focusing on sports lottery and game platform business. Considering that the game business is still in the early stage of development and the company is actively exploring the profit stage, we believe that in the process of strengthening the issuance agency business, cases such as this investment and participation in the upstream industrial chain of the game will also increase. There are two reasons why we are optimistic about the company's distribution agency business: (1) the company has online, offline and outdoor multimedia channels, which have obvious promotion advantages; (2) the company's traditional business contributes to stable cash flow and supports the pace of game business expansion.
Sports lottery APP has entered the final testing period and is looking forward to enjoying the World Cup feast: (1) all the hot teams in this year's World Cup are in the death group, football enthusiasm will further promote the growth of football lottery, and the growth rate of guessing lottery is expected to exceed 102% in 2010; (2) relying on the millions of loyal readers of the Football Daily, it is expected that the first batch of lottery fans will have a large customer base. Assuming that 20% of the readers are successfully docked, buying 100 yuan a week and returning it according to the proportion of 7% of the lottery revenue, the company's gross profit can reach 72.8 million yuan, and the business prospect is considerable; (3) the professional information team of the Football Daily is the core competitiveness of the platform.
Champs Elysees has entered the era of "human screen interaction", and the new media display promotes the space for the price of publication. Compared with the general outdoor LED large screen, in addition to the video dynamic display, Champs Elysees in the innovative application process will be "outdoor LED large screen + network technology + mobile Internet technology" for perfect integration, by scanning the QR code on the LED screen, directly access to the official website of the brand, access to products and promotion information, the media audience and the LED screen become closely related, creating a "new era of screen interaction".
The outdoor large screen location of the Champs Elysees is excellent, and the publication rate is among the highest in the industry. according to estimates, every 0.1 yuan increase in the price of the magazine will contribute 7% to the Champs Elysees. According to the betting agreement at the time of the merger and acquisition, the profits of Champs Elysees in the next three years will not be less than 56.83 million yuan, 68.7 million yuan and 81.56 million yuan, with an average growth rate of 20%. Considering the integration of the resources of the two companies after the merger and the incentive mechanism for implementation, we believe that the performance is more likely to be completed.
Share lock time difference, the stock price still has room to support. The listed company completed the restructuring in 2012, and after the completion of the transaction, the rights and interests owned by the major shareholders promised not to be traded or transferred for 36 months until June 19, 2015. Therefore, during this period of time, although the share price of Guangdong Media has risen a lot, the major shareholders will not reduce their holdings on a large scale due to the limitation of share locking, which is good for the company's stock price.
Profit forecast and valuation: assuming that Guangdong Media successfully completed the merger and acquisition of Champs Elysees in 14 years, and began to merge in the second half of the year, considering the increase of equity to 725 million shares, the acquisition of Champs Elysees to Guangdong Media in 14-15 EPS increased by 0.08 yuan and 0.1 yuan respectively. We estimate that the EPS of the company's preparation for the exam in 14-15 years is 0.49,0.56 yuan respectively, corresponding to 43 and 37 times PE. The target price is expected to be 26 yuan and will continue to be rated as "highly recommended".
Risk tips: M & A target performance is not up to expectations, follow-up integration work is not good; community newspaper construction work is lower than expected, local advertising revenue is sharply reduced; new media business progress is lower than expected.