Event

The company announced results KuaiBao, achieving operating income of 1.252 billion yuan, an increase of 58.84% over the same period last year; net profit of 213 million yuan, an increase of 19.09% over the same period last year; of which the impairment of the "The Voice of China" project was about 140 million yuan, excluding the impairment affecting the company's main business profit of 353 million, an increase of 97.21% over the same period last year.

Brief comment

Deep ploughing boutique dramas, revenue and profits increased significantly compared with the same period last year. The company's annual performance in 2017 mainly comes from "Legend of Ba Qing" (the total price is 915 million), "the full moon in bloom that year" (the second place in the audience rating of 2.56% in 2017, the cumulative number of hits is 13 billion), "emergency doctor", "plan", "Dear, long time no see" and other TV dramas, which have received good ratings and hits.

The follow-up reserve projects are rich. In 2018, the company expects to confirm revenue, including the fashion drama starring Fan Bingbing, "East Palace" and so on. Other projects include "We are Young in wartime", "Mian Qingluo", "Feng Zicai", "because of the Law" and so on; two head dramas "Vermilion Bird" and "the Legend of Zhuge Liang" are expected to confirm revenue in 2019, benefiting from the rise in the price of the head play, the company's main business will achieve steady growth.

The good voice deducts the impairment, and the company makes all the negative factors. In November 2017, the company received Talpa Media B.V. In the letter requesting the termination of the "The Voice of China" copyright license, the company has made an impairment on this matter, which will have an impact on its performance in 2017 of about 140 million yuan, including the impairment of license fees and related taxes paid by the company. and the related expenses for preparing the "good Voice" project.

Investment suggestion: the company is expected to achieve a profit of 450 million in 2018, corresponding to 18PE 17X, the valuation has a strong margin of safety, taking into account the elimination of negative factors of the company, the follow-up film and TV drama business has a stable growth, and is given a "buy" rating, with a target price of 23.50 yuan.

Risk hint: the progress of the work is not as expected; the industry policy has changed.