Events:
The sale of 30% equity in thumb games, a subsidiary of the company, was examined and approved by the CSRC, and the transaction was 227.0833 million yuan.
Core viewpoints
Cash 90.8833 million + 1044 Wantian Runji entertainment equity transfer of thumb game equity is expected to bring 147 million investment income: the company acquired 30% stake in thumb game with 54 million in September 2014, and thumb game brought 25.65 million investment income to listed companies from 2014 to 2016. and strengthen the company's strength in game distribution and operation, and deepen the layout of pan-entertainment. The sale of thumb games 30% equity consideration of 227.0833 million, of which cash consideration of 90.8833 million, holding 1044 million shares of the transferee (holding price of 13.05 yuan per share, the current latest price of 14.1 yuan per share), the company will no longer hold thumb game shares after the sale. The equity transfer is expected to bring considerable benefits to listed companies: 13.05 × 104439088.33-7965.361147.47 million yuan, and the current price of the proposed Tianrun entertainment shares is also higher than the consideration of the shares, and the follow-up is expected to continue to contribute investment income.
"that Starry Sky and that Sea 2" is scheduled for broadcast in Hunan Satellite TV's Youth Theater on October 2, which is scheduled to be broadcast during the National Day holiday to ensure the popularity and attention of the TV series, and the follow-up income of TV stations and online platforms will be further confirmed after the broadcast. Contribute to the company's annual profit growth. The company's non-public offering shares have been accepted by the CSRC, and in the future, it will increase the output of high-quality content with the help of capital advantages, and strengthen the production and distribution capacity of high-quality IP. On September 15, Guo Xiangbin, vice chairman and general manager of the company, accumulated 1.6 million shares and promised not to reduce his holdings within six months. after the increase was completed, the shareholding of major shareholders further increased, and some senior executives of the company increased their holdings of 165300 shares on September 12, demonstrating management's confidence in the company's business growth and performance improvement in the future.
Rich financing channels, help capital operation and industrial investment: the company seeks a variety of financing channels to enrich funding sources. At present, the company plans to issue bonds of no more than 900 million yuan. The current asset-liability ratio of the company is only 6.61%, and its assets are in good condition. After the debt financing meeting, the company will fully strengthen its financial strength and help the company's business layout. At the same time, the company plans to raise no more than 1.2 billion in non-public offering for the investment and production of TV dramas and online dramas, so as to further enhance the financial strength of the company in the field of high-quality TV drama production and strengthen the production and output capacity of high-quality TV dramas. In the field of industrial investment, the company has successfully invested in Dongyang Mandala in order to achieve deep cooperation with the company in the core business areas. In the future, the company is expected to further strengthen the main business, while relying on its years of experience in the field of pan-entertainment and industrial investment experience, enrich the business structure and thicken the company's performance.
Profit forecast and valuation: assuming that the impact of bond issuance and non-public offering on profits is not considered for the time being, and assuming that the expected investment income from this equity transfer is 147.47 million yuan, we expect the company's net profit from 2017 to 2019 to be 4.68,4.25,489 million yuan respectively, and the corresponding EPS is 0.54,0.49,0.57 yuan per share respectively. The corresponding valuation PE of current stock price is 16.3 ×, 18 × and 15.6 ×, respectively. We believe that the company's capital will continue to expand the production capacity of high-quality content and stabilize the growth of the film and TV drama business. at the same time, it is expected to continue to strengthen the business layout after the funds are in place. Maintain a highly recommended rating.
Risk hint: the game business advances slowly, and the film and TV drama business falls short of expectations.