Event description
The company released its annual report in 2017. during the reporting period, the company realized operating income of 1.401 billion yuan, down 2.18% from the same period last year; the company realized net profit of 89.4084 million yuan, down 15.65% from the same period last year; and the net profit after deduction was 69.9905 million yuan, an increase of 554.73% over the same period last year.
The growth rate of performance has slowed down, and the transformation of think tanks is beginning to show results.
The company's main business Internet information services grew steadily, although mobile value-added services still declined to a certain extent, but the overall business income was basically the same as the same period last year. In 2017, the company's homing net profit fell 15.65% compared with the same period last year, and compared with 2016, the company's net profit decreased by 61.35%. The main reason for the decline in the company's profits in 2017 was that the company increased its investment in business transformation, and its operating costs increased by 11.00%, resulting in a 7.44% drop in the overall gross profit margin. In addition, the investment income of 160 million yuan was confirmed by the disposal of the microscreen software equity in 2016. resulting in a higher base in the same period. Therefore, excluding non-recurrent profits and losses, the company's net profit after deduction is significantly improved, and the company's profitability is gradually enhanced. The company's transformation to an Internet new media think tank has achieved initial results, with a deep integration of the business model of copyright + channels, making the information service business maintain steady growth.
Hold hands with Tencent Gehua Cable, etc., to develop short video and live broadcast business
In March 2018, the company jointly established a joint venture with Cheng Tencent, Gehua Cable and Beiguang Wenzi Gehua to establish "people's Video Co., Ltd." (provisional name) to carry out the production and copyright trading of information short videos and live broadcasts, of which the company contributed 45 million yuan, accounting for 60% of the shares. The joint venture company will create a new short video and live broadcast brand "people's Video" featuring news, information and serious content, with the company's content production advantage and ideology-oriented gatekeeper ability. with the addition of the channel resources of Tencent and Gehua Cable, "people's Video" will become a model in the short video and live broadcast industry.
Profit forecast and investment advice
As a leading comprehensive online media in China, the company has significant advantages in brand content channels and steady progress in business transformation. It is estimated that the EPS from 2018 to 2020 will be 0.09,0.10,0.12 yuan respectively, covering it for the first time and giving it a "overweight" rating.
Risk hint: the regulatory policy is tighter and new business development is not as expected.
