Events:
2017H1's revenue was 387 million yuan, up 8.85% over the same period last year, and its net profit was 153 million yuan, up 71.84% from the same period last year. Net profit after deducting non-profit was 133 million yuan, up 51.07% from the same period last year, and earnings per share was 0.18 yuan, up 80% from the same period last year.
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1. The reason for the increase in performance: the revenue of school uniforms increased by 8.85%, but the net profit and net profit after deduction increased significantly, mainly due to the decrease in expenditure on three fees and the year-on-year increase in investment income, of which sales expenses decreased by 58.2% compared with the same period last year. Administrative expenses decreased by 33.81%, and financial expenses decreased by 30.36% affected by exchange rate fluctuations. The reason for the sharp reduction in sales expenses and management expenses is that the company has spun off the toy business and improved the operational efficiency of the company. The investment income comes from the long-term equity investment income of thumb play (11.49 million).
2. Upgrading from a single film and television content company to a comprehensive pan-entertainment company. In the first half of 2017, the company's TV series revenue mainly came from the first and second seasons of "that Starry Sky and that Sea". The first season has been premiered on Hunan Satellite TV, and the second season has been licensed and will be broadcast on Hunan Satellite TV, iQIYI, Inc. and other online stations in the third quarter. At the same time, the company began to extend to film and performing arts brokerage business and upgrade to an integrated pan-entertainment company.
3. A number of games will be launched in the second half of the year, and the company's game business relies on the first wave of subsidiaries to interact with Fengyun. Independent research and development of "Holy Land War" mobile games, "Titan three Kingdoms" mobile games, "Doluo Continental 2D" page games, "Mangtianji H5", "campus beauty close master H5" and other games, and plans to launch the online operation in the second half of 2017.
4. Equity and debt refinancing will be started at the same time to expand cash flow. The corporate bond project has been reported to the Shenzhen Stock Exchange, with an estimated financing scale of 900 million yuan. At the same time, the company's equity financing project has submitted a motion to the CSRC, with an estimated financing scale of 1.2 billion yuan. Equity financing has been invested in 4 TV dramas and 5 online dramas. The company's debt, equity two-way financing, the company "grain reserves to expand the army", reflecting the determination to go forward to the first-tier film and television companies.
Profit forecast and valuation
We forecast that the company's revenue from 2017 to 2019 will be 1.084 billion, 1.464 billion and 1.843 billion, and the net profit attributable to the parent company will be 404 million, 546 million and 688 million, respectively, with an EPS of 0.43 yuan, 0.53 yuan and 0.67 yuan, respectively, corresponding to 21 times, 17 times and 13 times of the current stock price, maintaining a "buy" rating.
Risk hint
The performance of M & A subsidiaries is not as expected, the new works are not as expected, and the regulatory risks of the media industry.