"Internal creation + epitaxial M & A + external cooperation" realizes the layout of the whole industry chain of Great Culture through the way of "internal creation + epitaxial M & A + external cooperation" to complete the establishment of Central South Film and Central South Music. Achieve the acquisition of Datang brilliant, Qianyi Zhicheng, Xinhua Vanguard, value interaction, Aurora Mobile Limited network, at the same time with China Film shares, Mango Media, most Amoy Technology (sing bar) to establish in-depth cooperation. Focus on building the strategic core of "Central and South Star Dream Factory" and complete the layout of the strategic territory of "Great Culture".
Upstream plus IP cultural enterprises to consolidate IP resource base
Xinhua Pioneer was acquired in June 2016 to achieve the layout of upstream IP resources and obtain the capabilities of mining, operation, promotion and recovery of IP resources. Xinhua Vanguard has established a huge resource pool of phenomenal writers, category A writers and category B writers, and at the same time creates new young writers every year with rich resources.
The downstream book shadow travel linkage realization, enhances the overall realization ability
1) Games: in October 2015, Vishang Interactive was acquired to enter the mobile game market, which is responsible for issuing and successfully operating more than 50 products online. The acquisition of Aurora Mobile Limited Network in September 2016 cut into the page game market, and since the second quarter of 2017, Aurora Mobile Limited Network has successfully developed boutique games such as "chaos War Domain" and "Wu Sheng Zhao Zilong". 2) Film and Television: the company acquired Datang brilliant in March 2014, and its performance grew steadily, and the book, film and travel linkage got twice the result with half the effort.
The artist brokerage system takes shape, which feeds the film and television plate.
1) Qianyi Zhicheng was acquired in April 2015, and its artists contributed a number of works with good word-of-mouth and commercial performance; 2) the training model for artists is becoming more and more mature. In 2016, the "1905 Central-South Red Film and Television training International College" was jointly established with 1905. In 2017, Central-South Music and Anhui Satellite TV jointly launched "China by the ear" to launch the selection of idol groups. 3) Qian Yi Zhicheng cooperated with Datang brilliant for many times, and achieved initial results in promoting each other with the artist system and the film and television plate.
Investment suggestion
We estimate that the annual EPS of the company in 2017-18-19 will be RMB 0.62, 0.78, respectively, and the current share price will correspond to 20 / 16 / 13 times PE in the same period, which is significantly lower than the average valuation level of the film and TV sector over the same period. With reference to the valuation level of comparable companies in the industry, the company is given a reasonable valuation of 18.6 yuan in 6 months (corresponding to 24 times PE in 17 / 18), with a "buy" rating for the first time.
Risk hint
The risk of policy regulation, the risk of M & An integration is not as expected, the risk of marketability of film and TV series and so on.
