The current situation of the company
The company announced that it intends to divest Ed Consai and transfer its 100% stake to Zhoushan Yide at a price of 320.24 million yuan. After the completion of the transaction, the company will no longer hold the stake in Ed Consai. At the same time, the company plans to buy back 250-500 million yuan at a price of no more than 10 yuan per share.
Comment
It is proposed to divest Educons, which has low operating efficiency, and focus on its core business. Internet marketing, acquired by the company in March 2016 with a consideration of 290 million yuan, focuses on search engine marketing (SEM). The cumulative deduction of non-net profit in 2015-2017 was 77.3 million yuan, accounting for 101.58% of the promised net profit. But in recent years, due to the downturn in SEM business, the profitability of Educons continues to be under pressure. 1H18 achieved a net profit of 9.25 million yuan, only 20.27% of the net profit promised in 2018. This transfer will optimize the industrial layout, avoid the potential risk of impairment of goodwill, and concentrate resources on the development of the company's core business.
Increase the repurchase efforts to demonstrate the confidence of the company. Recently, the company's stock price has fluctuated greatly, and the company believes that the current stock price can not reasonably reflect the actual operating conditions of the company, and adjusts the repurchase plan to carry out share repurchase with its own or self-raised funds, with a repurchase amount of 250-500 million yuan and a repurchase share price of no more than 10 yuan per share. It is estimated that the repurchase shares are about 2500-50 million shares, accounting for about 4.3% to 8.60% of the company's current total share capital. We believe that the company's buyback reflects confidence in the company's future development prospects and a high degree of recognition of the company's value.
Continue to optimize the business structure and focus on the three major sectors. Since the completion of the acquisition, the company has gradually improved the organizational structure and standards and changed its strategic direction. with content as the core, the 1H18 report has been officially divided into three parts: marketing services, film and television content, digital rights operations and services. 1H18 achieved revenue of 1.974 billion yuan / 550 million yuan / 638 million yuan respectively, an increase of 38.78% 70.95% 6.88% over the same period last year. We believe that after the divestiture of Edcom, the business structure will be further optimized, the marketing business gross profit margin will also be improved, and the three major sectors will jointly promote the company's performance growth.
Valuation proposal
Regardless of the Educonce divestiture, we will maintain the 2018 Universe 19e profit forecast of 287 million yuan / 325 million yuan, corresponding to an EPS of 0.49Univer 0.56 yuan. The company's current share price corresponds to 13.5 of 18max in 1919 and 11.9 times of Pax E. Maintain the recommended rating and target price of 8.4 yuan, which is 32% more than the current share price.
Risk
The acquisition integration is not up to expectations, and the advertising boom is low.