The performance of the boutique drama is outstanding, winning both ratings and word-of-mouth. The company's wholly-owned subsidiary, Neverland Star Park, has successfully invested in and produced a number of high-quality TV series "Network Linkage", which has achieved good ratings and click-through rates, as well as good word-of-mouth effect. In 2016, the premiere of four TV dramas produced and released by the company all won the first place in the same period of time, with the online click rate of "give me up, hold on to me" exceeding 10 billion. At present, the second season of the TV series "the Stars and the Sea" produced by the company is being broadcast on Hunan Satellite TV, iQIYI, Inc., Sohu.com Ltd and other platforms, and has achieved good ratings and reputation, with more than 1 billion views since its launch in October. At the same time, the company has a rich reserve of IP, has a reserve of more than 30 copyright works.
Increase investment in Dongyang mandala, enrich the types of film and TV dramas, and expand the business of online dramas and variety shows. The company's wholly-owned subsidiary, Neverland Star Park, has increased its capital of Dongyang Mandala with its own capital of 200 million yuan, and holds a 10% stake after the completion of the capital increase. The theme of Dongyang mandala film and TV drama covers a wide range of subjects, which is complementary to the theme of high-quality romantic drama insisted by Dream Star Park in content, which is helpful to broaden the user group and improve the user influence. Dongyang Mandala also has excellent management and operation experience in online drama, artist brokerage and variety. The increase in capital is conducive to the promotion of the company's film and TV dramas on the network, improve the industrial chain, and make the company's profit means in the film and television field more diversified.
Investment suggestion and valuation: the operating income of 2017E, 2018E and 2019E is expected to be 1.066 billion, 1.318 billion and 1.564 billion respectively, and the net profit of homing is 339 million, 419 million and 500 million respectively, and the corresponding EPS is 0.39,0.49,0.58 yuan, corresponding to 22X17PEP 18X18PE. The company's current valuation has a certain margin of safety, and is optimistic about its strength to create high-quality content. at the same time, with the diversification of the company's themes and fields, it will continue to make efforts in the film and television field, giving the company a "buy" rating of 11 yuan.
Risk analysis: industry policy risk; film and television, game projects can not confirm the income on time.