Main points of investment
The results increased significantly in the first three quarters, with the rapid development of derivatives business, real interest network and thickened profits. The company's Q1-Q3 realized revenue of 680 million yuan, an increase of 54.9% over the same period last year, and a net profit of 300 million yuan, an increase of 101.2% over the same period last year. The net profit of non-return was 140 million yuan, an increase of 108.0% over the same period last year. The company released a forecast of its full-year results for 2017, with an estimated net profit range of 3.42-437 million yuan, an increase of 80% over the same period last year. The reasons for the substantial increase in performance: 1) IP derivatives revenue and animation games increased. 2) in March, the company also reported the research and development of mobile social games and operator Zhenqu Network, with a net gambling profit of 102 million yuan in 2017, leading to a big increase in the company's game business revenue. 3) the non-recurring profit and loss of Q1-Q3 is 160 million, which mainly comes from the investment income recognized by KascendHolding.Inc6.17%, the operator of the mobile game live broadcast platform "ChushouTV" sold by the subsidiary Meisheng in Hong Kong. 4) the cost control of the company has been strengthened, and the expense rate has decreased during the period.
Become the largest shareholder of JAKKS + IP cooperation is extensive, the road of derivatives is worth looking forward to. 1) in the first half of this year, the company increased its capital to Walt Disney Company authorized by the United States and the third largest toy and animation clothing giant JAKKS, with a shareholding ratio of 19.5%, making it the largest shareholder of the subject matter. By investing in JAKKS, the company is expected to enhance its derivatives design and R & D capabilities, and is expected to share the high-quality upstream IP resources owned by JAKKS. The joint venture between the company and JAKKS has helped the company obtain the authorization to sell Walt Disney Company toys and related derivatives. 2) in terms of IP cooperation, the company deepens its cooperation with IP sources such as Walt Disney Company, Marvel and Nintendo to jointly develop IP derivatives such as Star Wars, Frozen, Warcraft, Super Mario and Marvel Heroes. In addition, Meisheng second Yuan and China Literature reached a formal cooperation, access to the top domestic cartoon IP "full-time master" of the authentic cos peripheral authorization.
Animation, games gradually ferment: the animation game business is growing rapidly this year. Take the original IP "the Devil's Story" as an example, the 3D animation online drama was launched in May this year, and it ranked second in the list of newly added works in May, and repeatedly entered the top three of Bilibili Inc. 's domestic animation popular list and Baidu, Inc. 's animation list. He won the crown of "iQIYI, Inc. Animation list" many times, and the adapted film has been in the production stage. Mobile games with IP will also be launched next year.
Profit forecast and investment advice: it is estimated that the EPS from 2017 to 2019 will be 0.44,0.56,0.66 respectively. The average PE of comparable companies in the clothing industry is 40.11 times, but considering the opportunities brought to the animation clothing industry by the vigorous development of the animation industry, and the synergy between the company's own business, the company is valued at 45 times in 2017, corresponding to the target price of 19.83 yuan, and the "overweight" rating is given for the first time.
Risk hints: exchange profit and loss risk, M & A target performance may fall short of expectations, IP development progress may fall short of expectations.