Main points of investment
Tianyi film and television boutique dramas continue, and the company's performance growth effectively ensures that with the core creative team composed of senior film and television producers, famous directors, famous screenwriters and marketing experts, Tianyi film and television quality drama production strength is strong. At present, the company produces and distributes two or three TV dramas (150 episodes) and two online dramas a year, maintaining a stable operation and a strong momentum.
The company's main works include "the good Life", "Flowers bloom like a Dream", and began filming "Cao Cao" in early 2018. "Flowers like a Dream" and "the good Life" confirmed their revenue in the second half of this year and are expected to make a profit of about 100 million yuan. "Cao Cao" will be released next year. The TV series has 80 episodes, and satellite TV's copyright is expected to be 600 million episodes. Video website royalties are expected to be about 1500 million episodes. A number of boutique dramas will effectively ensure the company's performance growth this year and next.
With the establishment of Lugang Interconnection, plus the development of online TV series, Super IP is expected to improve next year's performance in the context of the outbreak of online dramas in China in recent years, in order to better produce and distribute Internet movies and TV dramas, the company invested 100 million yuan in July 2015 to set up a wholly-owned subsidiary Lugang Interconnection, and invested 700 million yuan in online drama development in 2016. At present, the company has successfully completed the shooting and post-production of the online drama "Moke Line", which is expected to be sold in the second half of the year. According to 20,200 episodes, it is expected to contribute 40 million to revenue. In addition, the company is making every effort to prepare for the development and production of "touch gold", a companion of the "ghost blowing lantern" series, which has a strong IP effect and is expected to be released next year, which will provide a guarantee for the company's performance.
Actively expand overseas markets, the company's textile business revenue growth rate is stable in recent years, the overall development of China's textile situation is stable. In this context, by expanding the product line and expanding overseas markets, the company's textile business revenue has achieved steady growth, and it is estimated that the textile business will record an annual growth rate of about 10%.
Investment suggestion
We have upgraded our investment rating from "overweight" to "buy". Based on the fact that the company's performance is about to enter the upward range, the reason is: (1) the long-term 1H17 of the century is a low point (loss 5.93 million), and the estimated profit of 2H17 is a high probability event; (2) the performance of Tianyi Film and Television in 2017 depends on "good life" and "blooming like a dream".
It is guaranteed that the 2018 drama "Cao Cao" will be a big year of performance. We expect the company's operating income in 2017, year and 2019 to be 4.32 billion, 5.12 billion and 5.95 billion respectively, the net profit attributable to the parent company to be 260 million, 350 million and 420 million respectively, and the earnings per share to be 0.29,0.39 yuan, respectively. We give the textile business and equity investment business 10X PE, give the film and television business multiple valuation, weighted average after the overall valuation of 22.6X, corresponding to the 2018 target price of 8.80 yuan.
Risk hint
Increased competition in the textile industry and the risk of exchange rate changes. The online drama market is not as good as expected.