Event description
Tianzhou Culture released its semi-annual report for 2017 on August 8. during the reporting period, the company achieved a total operating income of 362.6669 million yuan, an increase of 51.75% over the same period last year, and a net profit of 110.1398 million yuan belonging to common shareholders of listed companies, an increase of 52.40% over the same period last year.
Event comment
The subsidiary contributed profits and the gross profit margin increased steadily. 1) during the reporting period, the combined net profit of the company's subsidiary Magic Times was 43.2626 million, down 23.21% from the same period last year; the combined net profit of the subsidiary Youai Network was 63.1175 million yuan, which increased the company's first-half net profit by 42.18% in order to be included in the scope of merger in the same period last year. 2) during the reporting period, the company's gross profit margin further increased to 63.78%, an increase of 445bp over the same period last year, mainly due to the increase in the proportion of revenue from mobile games business. The company's sales expense rate and management expense rate were 9.53%, 25.27% and-1.42% respectively, changing by-0.34% and 10.32% over the same period last year; interest income increased by 148.72%, resulting in a decrease in the financial expense rate to-1.42%.
The share of game revenue has further increased, and the product-IP is rich in reserves. 1) during the reporting period, the revenue of the company's mobile game business reached 234.1086 million yuan, an increase of 149.03% over the same period last year, and the proportion of revenue increased to 64.55%. The revenue from book publishing and distribution was 128.5583 million yuan, down 11.32% from the same period last year, and the proportion of revenue decreased to 35.45%. 2) at present, the company operates a total of 31 games, covering ARPG, SLG, card and other types, among which self-developed products include "forget Immortals", "Crouching Tiger, Hidden Dragon", "OL", "King of Tower King", "five Tigers", "Imperial era", "Martial Arts", "Shushan World" and so on. The agency products include "Lingyu Breaking the Sky", "Qingyun Formula", "Miracle killing Immortals", "Journey to the West", "knife Fire" and so on. In addition, the company has recently launched "the rekindling of the World" and "Crouching Tiger, Hidden Dragon II" will be tested in the near future. 3) the company's R & D reserves of "Supreme Master", "Empire of Qin Empire", "National Constellation" and other 10 games will be launched in the second half of the year, in addition, there are more than 10 IP resources reserves, including Xianjian Inn, Dongli Jian Youji, Love Guangming, etc.
Continue to increase the size of the game industry, improve the game research and transportation strength. In June, the company announced that it planned to see a 73% stake in technology in the form of cash plus equity and achieve 100% holding. For the first time, science and technology are mainly engaged in the research and development and distribution of mobile games. at present, products have been issued, such as "the Annals of the three Kingdoms", "Brothers of the three Kingdoms", "demon tricks" and so on, with a reserve of 6 self-research and agent games. covering role-playing, card, strategy, competitive and other types of games. In the past two years, the company has integrated the magical era, Youai network and other R & D-focused tourism enterprises, and the acquisition of first-time technology is expected to strengthen the company's strength at the publishing end, with the help of the multiple distribution channel system constructed with Apple Inc, YingYongBao, BABA Games, XIAOMI, Baidu, Inc., Letv, Huawei, Oppo, Vivo, Meizu, etc., to improve the company's game industry chain and achieve complementary advantages and resource synergy.
In addition, the performance commitment of the target company is to achieve a net profit of not less than 140 million yuan, 170 million yuan and 210 million yuan respectively from 2017 to 2019, which is expected to thicken the company's performance and bring epitaxial rapid growth.
Profit forecast and investment suggestion
We are optimistic about the layout of the company's education, pan-entertainment, publishing and distribution business since the transformation; the coordinated integration of endogenesis and extension is expected to continue to promote the development of the company. Ignoring the impact of the acquisition of beginner's technology on performance and equity for the time being, and maintaining the original profit forecast, the company's EPS from 2017 to 2019 is expected to be 0.47\ 0.59\ 0.69, corresponding to the company's closing price of 12.56 yuan on August 7, and 27\ 21\ 18 for 2017-2019PE.
There are risks
The risk of policy change; the intensification of market competition; the uncertainty of the income of cultural products; mergers and acquisitions and business integration are not up to expectations; fluctuations caused by the systematic adjustment of the market.