The revenue of Huawei Culture in the first half of 2017 was 387 million yuan, an increase of 8.85% over the same period last year. The net profit of shareholders of listed companies was 153 million yuan, up 71.84% over the same period last year. The net profit after deducting 133 million yuan was 51.07% over the same period last year. The overall performance was in line with expectations. From January to September 2017, the company expects to achieve a net profit of 210 million yuan to 290 million yuan, an increase of 35% over the same period last year.
In terms of film and television business, the company's boutique dramas continued to make efforts, and Neverland Star Park made a net profit of 118 million in the first half of the year.
The film and TV drama production revenue of H1 Company in 2017 is 323 million yuan (35.64% compared with the same period last year). The TV dramas that mainly contribute to revenue and profits include the first season of "that Starry Sky, that Sea" and "that Star, that Sea".
The second quarter TV station sales revenue recognition and so on. The gross profit margin is 40.34% (down 5.04% from the same period last year). We judge that the decline in the gross profit margin of the film and TV drama business is mainly due to the increase in the cost of special effects in the second quarter of "that Starry Sky and that Sea". According to the TV series confirmation cycle, we judge that the second half of the year is expected to have "that starry sky that sea" network platform sales revenue recognition.
In terms of game business, the first wave achieved a net profit of 31.22 million yuan in the first half of the year, and Fengyun interaction achieved a net profit of 10.31 million yuan. More works will be launched in the second half of the year.
In 2017, H1's game business revenue was 62.7198 million yuan (- 15.23% compared with the same period last year), and its gross profit margin was 87.27% (an increase of 3.30% over the same period last year). In 2017, the first wave of H1, Fengyun Interactive, based on the operation of the original games, independently developed "Sanctuary War" mobile games, "Titan three Kingdoms" mobile games, "Doluo Continental 2D" page games, "Mangjing H5", "school beauty's personal master H5" and other games, and plans to launch the online operation in the second half of 2017.
The company actively promotes refinancing and continues its layout around film and television entertainment.
The pre-disclosure plan of the company plans to invest an additional 1.2 billion in TV dramas and online dramas to provide financial support for Xingsheng Park boutique dramas, and plans to issue 900 million bonds to lay the foundation for the company's sustainable layout. Announcement 200 million capital increase of 10% equity in Dongyang Mandala, continue to increase the content of TOP film and television entertainment around Xingsheng Park, and provide logical support for medium-and long-term growth It is proposed to sell 30 per cent of thumb play shares to Tian run several Entertainment, with a transaction consideration of 227 million yuan. If the subsequent transaction is completed, the company will receive 1044 million shares of Tian run Entertainment, as well as 90.83 million yuan in cash, thickening investment income. At present, Tian run several Entertainment has reported the information to the China Securities Regulatory Commission and obtained the acceptance notice.
Investment suggestion: the company spun off its original toy business in the second half of 2016, and its main business in 2017 is concentrated in the field of film and television games with high gross profit margin. Without considering the extension expectation, we expect the company's net profit for 17-19 years to be 331 million yuan / 409 million yuan / 496 million yuan respectively, corresponding to 0.38 EPS 0.48 PE 0.58 and 23.5X/19.0x/15.7x respectively. Xingsheng Park acquisition continues to exceed the performance of gambling, different from the general transformation companies, the follow-up is expected to build film and television game integration around IP, taking into account the overall valuation adjustment of the media sector, give the target price 11.62 yuan, maintain the buy rating.
Risk tips: TV series project sales do not meet expectations, game flow does not meet expectations, M & An integration risk