Main points of investment
Cultural mixed reform is in the vanguard, and the transformation and upgrading are constantly deepening.
Over the years, Huasu Media has been exploring transformation and upgrading, from a single regional cable TV operator to a national leading new media and smart city operator.
The largest shareholder is Huasu Group, and the actual controller is Hangzhou Finance Bureau. The company actively promotes the reform of mixed ownership and introduced Yunxi Investment as the second largest shareholder in 2015.
The performance is growing steadily, the net interest rate is rising, and the cash position is excellent.
Huasu Media maintained rapid growth in revenue and net profit before 2012. Thanks to the rapid growth of the new media business, revenue grew at an average annual compound rate of nearly 24% from 2016 to 2015, while its net profit reached 45%. At present, the company as a whole is in a period of steady growth.
The company's gross profit margin remained stable on the whole, while the net profit margin maintained an upward trend. Thanks mainly to good cost control, the company's financial expenses fell sharply after the completion of fixed-increase financing in 2015.
The company has good cash flow and abundant funds. In 2018, the scale of monetary funds plus bank financial management is close to 7.8 billion yuan.
Cable TV has been hit, IPTV and OTT ushered in the spring. With the progress of technology, IPTV and OTT TV occupy the initiative with huge content resources and good user experience, and achieve rapid development in recent years. As the willingness to pay for VOD increases, the demand for content is diversified, and the attractiveness of the large screen increases, IPTV and OTT still have a lot of room for development.
Let a hundred flowers blossom and gradually get rid of the dependence on traditional cable TV business. In terms of revenue share, the company has formed a tripartite pattern of traditional business, new media business, broadband and other services. Among them, OTT business has grown rapidly in recent years, with the share of revenue rising from 3.03% in 2015 to 16.57% in 2018.
With scarce license plates, six competitive advantages build a moat. The company is one of the seven Internet TV broadcast control licenses, and has IPTV license and mobile TV integrated broadcast control business and content service license.
Based on the scarce license plate, the company has set up a platform from content to operation, and gradually formed the following advantages: location advantage, complete license plate, comprehensive content, balanced business, large user base and many partners.
Develop wisdom, radio and television to open up a new space.
Huasu Media has four main directions for the development of intelligent radio and television: accelerating the construction of intelligent infrastructure, popularizing digital applications in families, deeply participating in the construction of smart cities, and innovating digital culture content services.
Hua Shu has more than ten years of experience in smart city construction and operation. After years of development, in the field of government informatization, it has formed the influence and reputation of the whole province and even the whole country. In the commercial field, Huashu has occupied more than 70% of the hotel TV market share in Hangzhou's main market. Specifically, the smart city has carried out in-depth layout in the fields of urban brain, intelligent government affairs, intelligent community, intelligent family, outdoor big screen, intelligent education and so on.
Intelligent radio and television business is expected to become the company's new business growth point in the future.
Profit forecast: we predict that Huasu Media will achieve revenue of 3.607 billion yuan and 38. 5% respectively from 2019 to 2021.
2.4 billion yuan, 4.052 billion yuan, an increase of 4.99%, 5.99% and 5.97% over the same period last year; the net profit of returning to the mother was 732 million yuan, 784 million yuan and 827 million yuan respectively, an increase of 13.66%, 7.04% and 5.57% over the same period last year; and the corresponding EPS from 2019 to 2021 was 0.47,0.51,0.54 yuan respectively. Cover for the first time and give an overweight rating.
Risk hints: the risk of industrial policy change, the impact of new technology, the intensification of competition, and the downward preference for market risk.