1H18 meets expectations
Simei Media announced 1H18 results: operating income was 2.588 billion yuan, up 43.47% over the same period last year; net profit from home was 174 million yuan, up 28.67% from the same period last year, falling into the forecast range of 1.6-230 million yuan; net profit from non-return was 166 million yuan, up 28.46% from the same period last year. The capital reserve fund will be used to increase 7 shares for every 10 shares of all shareholders. The company expects the net profit from January to September to be 1.90-285 million yuan, an increase of 0-50% over the same period last year.
Trend of development
Take the content as the core development, the three major plates work together. The company has completed the transformation of organizational structure standards and strategic direction. The three major business sectors of marketing services, film and television content, digital rights operation and services respectively achieved revenue of 1.974 billion yuan / 550 million yuan / 638 million yuan, an increase of 38.78%, up 70.95% and 6.88% over the same period last year. Marketing services gross profit margin-4.43pct to 8.42%, film and television and digital reading gross profit margin dropped slightly to 27.43% 57.32%. The company has tried the water to innovate, working with advertisers and film and television companies to launch products based on film and television content, such as "Fire like Song" in Luzhou-flavor liquor "tasting flower brew" and so on. upgrade from traditional media agent marketing service to content-based multi-level industrial platform.
The rate is basically stable, and it has been effective to increase the management of accounts receivable. During the reporting period, the sales expense rate / management expense rate decreased by 1.0pct/1.3pct to 3% and 2.9% respectively, and the cost management was good; the financial cost increased by 4.5 million yuan to 4.67 million yuan, mainly due to an increase in short-term borrowing, which is still relatively controllable. The cash flow of the company's operating activities during the reporting period was-12.48 million yuan, mainly because the company strengthened the management of accounts receivable and the turnover rate was faster than that of the same period last year.
Set up a platform company to open up the upstream and downstream industrial operation and pan-entertainment development. At the same time, the company announced that it intends to contribute money to participate in the establishment of Simei Innovation and Simei Pictures, and to set up a limited partnership at the shareholder level through a platform company to absorb the core backbone of the business. explore value in the vertical field of innovative brand incubation and film and television content industry chain. In addition, during the reporting period, the company funded the establishment of Zhejiang Bulu Culture Media together with Zhejiang Satellite TV's New Blue Network to carry out short video / artist brokerage / derivatives business. Developing new business in a more flexible way and introducing professional partners are expected to create new growth points for the company.
Profit forecast
Due to the decline in business gross profit margin, we have lowered our earnings per share forecasts for 2018 and 2019 by 7% and 11% from RMB0.90 and RMB1.07 respectively to RMB0.84 and RMB0.95 respectively.
Valuation and suggestion
At present, the company's share price corresponds to 20 times 18-year price-to-earnings ratio, and we maintain the recommended rating, but due to the downward revision of earnings forecasts and the downward shift of the valuation center, we have lowered the target price by 24.0% to RMB 19.00, corresponding to the 19-year price-to-earnings ratio of 18game. there is room for a 12% increase.
Risk
Acquisition integration is not up to expectations or goodwill impairment, advertising boom is low.