Key points of investment
Video payments in China are about to explode
According to Yian Consulting's “Insights on Film and Television Content Industry Trends in the Era of Consumption Upgrades” report, as of December 2016, the number of paying users of domestic video websites reached 75 million, an increase of 241% over the 22 million in 2015. According to Zhiyan Consulting's data estimates, the size of China's online user payment market in 2017 was about 14.21 billion yuan, an increase of 47.7% over the previous year. As of December 2016, the number of paying users accounted for only 13.76% of online video users in China during the same period. As the payment model of the video network industry becomes more mature, there is still plenty of room for growth in the online user payment market.
The company's newsside content advantage is obvious
The company is a media culture listed company controlled by People's Daily. It is also one of the largest comprehensive online media on the Internet. As the vanguard of the country's key news websites and the first central online media to go public, daily communication covers more than 130 million people.
Formed strategic partnerships with Tencent and Gehua Cable to focus on information-type video and live streaming services
On March 2, 2018, the company, Linzhi Tencent Technology Co., Ltd. (hereinafter referred to as “Tencent”), Beijing Gehua Cable Network Co., Ltd. (hereinafter referred to as “Gehua Cable”) and Beijing Beiguang Wenzi Gehua Venture Capital Center (limited partnership) (hereinafter referred to as “Beiguang Wenzi Gehua”) jointly established “People's Video Co., Ltd.” (tentative name) (hereinafter referred to as the “Joint Venture”) to carry out production and copyright transactions for information-based short broadcast videos. Of these, the company accounts for 60% of the shares. The joint venture aims to build a new video brand “People's Video” (tentative name) under People's Daily's media integration policy. It is positioned as a short video and live streaming brand featuring news information and serious content. The copyright belongs to People's Online.
Profit Forecasts and Ratings
The company is China's leading comprehensive online media with a strong shareholder background. It is a media culture listed company controlled by People's Daily. It is also one of the largest comprehensive online media outlets on the Internet. As the vanguard of the country's key news websites and the first central online media to be listed, People's Online is a website dedicated to making the best content, and has the advantage of monopolizing news content. Partnering with Tencent and Gehua Cable to focus on information-type video and live streaming services is a new business growth point. We estimate the company's net profit of $220 million, $235 million, and $251 million for 2017, 2018, and 2019, respectively, corresponding to earnings of $0.20, $0.21, and $0.23 per share, respectively. For the first time, investment ratings given to “buy” were covered.
Risk warning
Valuation risk, policy risk.
