Main points of investment:
The traditional radio and television business is declining, and industrial upgrading is expected to pass the painful period of transformation. In the first half of 2017, the company achieved revenue of 974 million yuan (year-on-year-6.6%) and net profit of 160 million yuan (year-on-year), mainly due to the downturn in the radio and television industry and the decline of the company's basic cable TV business. According to the development bulletin of the cable TV industry, 2017Q2, the number of cable TV subscribers in China has dropped to less than 250 million (- 1.5% compared with the same period last year), the number of cable digital TV subscribers has dropped to less than 160 million (- 4.3% compared with the same period last year), and the contribution rate for cable digital TV users has dropped to 76.56% (- 3.5% compared with the same period last year). We believe that the traditional radio and television industry is in a recession, and transformation and upgrading has become an inevitable trend. Through the Internet, cloud computing, big data and other technologies, the company is seeking new profit growth points in education informationization and intelligent forestry in Jilin Province. It is expected to change the dependence on traditional business and get through the painful period of transformation.
The pilot project of wired and wireless converged network has been formally approved, and the demonstration project jointly built by the State-owned Forestry Administration has been continuously promoted. During the reporting period, the company launched the Northeast Ecological big data Center construction and wildlife protection park construction pilot projects, and obtained the approval of the wired and wireless fusion network experimental project on July 24, and will carry out natural, ecological and forest protection related business in Yanbian and Baishan areas. We believe that the company's technical services and its action force have been recognized, and continue to promote the state-owned forestry administration co-construction demonstration project.
Both ends of B and C provide high-quality educational resources, and educational informatization projects are landed in an orderly manner. TO B: educational optical fiber network and JTV courier classroom construction. During the reporting period, the network entered more than 700 schools, enrolled 15000 classes, and deployed more than 500 special delivery classes, such as recording, interactive, live broadcast, etc. In addition, it has reached a strategic cooperation with Jilin Institute of Education to integrate the research resources of teachers in the college. TO C side: for all students' families in K12 stage in Jilin Province, it provides an educational public service platform for students, covering teaching resources of various disciplines in K12 stage. During the reporting period, 6.1 million copies of resources are added and 2258 copies of popular science resources are introduced. We believe that the company relies on its own background resources of state-owned enterprises to implement the education information project, which is expected to provide a stable income for the company.
Film and television industry chain and "VR+ radio and television" layout, actively explore profit growth points. The company makes use of its own technology and resources accumulated in the traditional radio and television business for many years, and the multi-industry layout is expected to enhance the company's profitability. Its I-PON standard of Gigi Huitong intelligent terminal products has been mass production, and layout of 8 provinces, has sold 200000 sets of intelligent access gateway products. In terms of film and television: eight invested studios have been opened, and the TV series "Wang Chunyi and Liu 15" participated in by Jilin TV is scheduled to premiere in major satellite TV stations at the end of the year. VR+ Radio and Television "industrialization application: the company signed a cooperation agreement with Shenzhen Jiachuang Video on June 29 to jointly build a" VR city ".
Profit forecast. We believe that the continuous promotion of the company's intelligent forestry, education information and other social information projects, and the integration and upgrading of new technology and traditional business (VR+ radio and television) are expected to promote the company's performance growth.
We estimate that the EPS of the company from 2017 to 2019 is 0.13,0.14 and 0.16 yuan respectively.
With reference to the valuation of the comparable company, the company was given 29 times PE in 2017, corresponding to the target price of 3.77 yuan, to maintain the overweight rating.
Risk hint. The traditional radio and television business is declining, the project promotion is not as expected, the transformation is not as expected, the market systemic risk and so on.
