Main points of investment
The growth rate of performance is in line with expectations. In the first half of 2017, the company achieved operating income of 636 million yuan, an increase of 54.08% over the same period last year, a net profit of 133 million yuan, an increase of 191.20%, and a non-return net profit of 130 million yuan, an increase of 206.96% over the same period last year. At the same time, the company forecasts that the company will achieve a net profit of 1.99-265 million yuan in the first three quarters of 2017, an increase of 50% 100% over the same period last year. The main reason for the company's performance growth comes from the extension and merger of companies such as Aurora Mobile Limited network, as well as the rapid growth of the company's film, television and game business, and the performance growth rate is in line with expectations.
The film and television business continues to develop, and the development of large IP continues to advance. During the reporting period, the company's film and television business achieved an income of 171 million yuan, of which Datang brilliant realized an operating income of 158 million yuan and a net profit of 52.703 million yuan. During the reporting period, the company invested in filming plays such as "Farewell to Las Vegas", "here comes the Police Dog" and "the out-of-stock Man on Orange Street", laying a solid foundation for the growth of the company's film and television business this year. In addition, the company's heavyweight IP "touch gold", "snow covered with sand", "Jungle King" and other key film and television projects are under way. In addition, the company has begun to develop its own scripts for "Happiness can wait" and "fraudulent Crime". At the same time, it has stored more than 70 IP projects, such as "Feng Wu Weiyang: the Legend of Lu Pheasant", "Xuanyuan Yi", "you won't disappear", "Peach Blossom debt" and so on.
The game strength continues to strengthen, focusing on the development of high-quality games. During the reporting period, the company realized game income of 191 million yuan, of which value still interactive realized income of 190 million yuan and net profit of 80.166 million yuan; Aurora Mobile Limited network realized income of 29.268 million yuan and net profit of 22.747 million yuan. During the reporting period, the company mainly used page tours including "Wu Shen Zhao Zilong", "Journey to the West", "Nine days sealing God", and mobile games including "Pokemon Reproduction", "duel City", "Little three Kingdoms", "death Awakening" and other projects. In the second half of the year, games such as "painting the Cup of rivers and lakes", "the World Fairy King" and "Moonlight Treasure Box" will be launched. At present, Aurora Mobile Limited network has set up two mobile games teams, the company will make efforts to develop high-quality games in the future.
Focus on internal integration and coordination, continue to build a leading pan-entertainment group. After a series of mergers and acquisitions since 2014, the company has formed a pan-entertainment system with film and television, games, artist brokerage and literary copyright as the core, followed by the introduction of core executives such as Liu Chun and Hong Tao, and the bet on Datang brilliant this year will expire. The integration and coordination of various businesses in the future is an important point. We expect that the follow-up company will continue to make efforts in organizational structure, personnel motivation, business coordination, etc., to continue to build a leading domestic pan-entertainment group.
Risk factors. Asset integration risk; industry competition and policy risk; core brain drain risk.
Profit forecast, valuation and investment rating. The company's film and television, game business is progressing smoothly, we maintain the company's 2017-19 EPS profit forecast of 0.56 prime 0.68 plus 0.78 yuan. The current price is 14.13 yuan, corresponding to 2017-2019 PE is 25-21-18 times. Taking into account the changes in the current market environment, the company's "touch gold" and other project development progress is slower than expected and other factors, downgraded to "overweight" rating, investors are advised to pay attention to the progress of the company's heavyweight products.
