Main points of investment:
With the continuous growth of revenue and profit, it has become a leader in China's entertainment industry. In 2016, the company achieved operating income of 2.575 billion yuan, an increase of 36.61% over the same period last year, a net profit of 378 million yuan, an increase of 41.8% over the same period last year, and fully diluted earnings per share of 0.47 yuan, an increase of 42.42% over the same period last year. 933 million yuan of the company's annual revenue came from marketing income, accounting for 36.25%, 823 million yuan from variety income, accounting for 31.98%. 549 million yuan comes from the film and television business, accounting for 21.3% of the share. 264 million yuan comes from the sports sector, accounting for 10.24%, while other main business accounts for 6 million yuan, accounting for 0.22%. During the reporting period, the company adhered to the development strategy of high-quality content, established an industrial layout with media entertainment content as the core and multi-plate coordinated development, and realized the horizontal coordination among film and television, variety and sports sectors. vertical coordination among content, media and customers leads China's entertainment industry. The company successfully completed a non-public offering in 2016 to refinance 2.172 billion yuan, providing sufficient financial support and guarantee for the rapid growth and extension expansion of the company's existing business.
Film and television adhere to the high-quality line, to younger, network successful transformation. The company's film and television revenue in 2016 mainly comes from "the workplace is a technical job", "long live Love", "Crouching Tiger", "gone with the Wind" and "Hunter"
The first round of releases of projects and the second round of releases of previous plays. "late Night Canteen" and "Legend of Liji", as the benchmark repertoire of the company's film and TV dramas to the younger network, have been unanimously recognized by the market. The urban love drama "late Night Canteen" is adapted from Riman Super IP, directed by Cai Yuexun and starring Huang Lei. The selfie has aroused heated discussion and will be broadcast on Beijing Satellite TV, Zhejiang Satellite TV, iQIYI, Inc. and other platforms in June 2017. The costume martial arts drama Legend of Liji is adapted from Wen Shiren's Legend of the Ming Moon in Qin Dynasty, directed by Liu Xin, starring Dili Reba and Zhang Binbin, and will land on Zhejiang Satellite TV, Youku and other platforms in August 2017.
Deep ploughing variety positioning leader, performance release into the harvest period. During the reporting period, the company's variety income mainly came from "whirlwind filial son", "Cross-border Song King", "my new clothes" and so on. Among them, "whirlwind filial son", as the first variety program separated from production and broadcasting by Hunan Satellite TV, is the best new variety show in the whole market in the first quarter. The average audience rating of CSM35 City Network is 1.53%. It is highly recognized by the market for its high quality, high reputation and high ratings. "Crossing King" continues the company's advantages in producing "the most beautiful harmony", has always maintained high ratings, high attention and high popularity, and has become a quasi-phenomenal variety show. A total of 13 programs showed an overall upward trend, with 11 issues ranked first in the Baidu index. The average audience rating of CSM35 City Network is 1.51%, and the final audience rating reached a new high of 1.91% in the whole quarter, ranking first among all provincial satellite TV stations and Weibo Corp TV Index TOP1. Kuyun's share of real-time data is better than 12%, setting a new record for Beijing Satellite TV. It has been ranked No. 1 in Weibo Corp variety list and No. 1 in Crazy Variety season for 13 consecutive weeks.
The sports layout scale is emerging, innovating the comprehensive content marketing of "sports + entertainment". During the reporting period, the company continued to deepen the layout of sports marketing business, rapidly expanded its sports business, successfully held UEFA Champions League Basketball Tour in Chengdu and Shenzhen, and successfully set a precedent for live broadcasting of Europe's top sports competitions on Beijing Satellite TV, and China's leading sports marketing and event operation platform began to take shape. The company sets up VR Division, which adopts industrial VR shooting technology and live video editing solution to make sports and entertainment industry resources cooperate deeply, and build an integrated content marketing solution for users.
Profit forecast. In 2017, the company will continue to steadily promote the pan-entertainment development strategy, make use of the strong accumulation of entertainment and sports resources, continue to create cultural and entertainment popular style boutique content, and achieve film and television + variety + sports + integrated marketing depth coordination and comprehensive blossom. We estimate that the company's EPS in 2017-2019 will be 0.66,1.10 and 1.41 yuan respectively, and then refer to the content industry and marketing industry Ciwen Media, print Media and Huatze Film and Television for 2017 PE will be 27.03,32.9 and 21.6 times respectively, and taking into account the obvious endogenous advantages of the company's film and television production and the extensive integration protection provided by rich IP reserves, we give the company 35 times valuation in 2017, corresponding to the target price of 23.1 yuan. Maintain a "buy" rating.
Risk hint. The risk of project input and output brought by the intensification of market competition, the risk of policy supervision of film and television variety products, the risk of large balance of accounts receivable and the risk of large inventory balance.
