Key points of investment:
Relying on traditional business advantages, clear strategic layout. The company's revenue for the first three quarters of '16 was 887 million, an increase of 157.22% over the previous year; Guimu's net profit was 19.35 million, a year-on-year decrease of 18.94%. Relying on mass user video platforms on Internet PCs and mobile terminals, the company has gradually built and perfected virtual reality platforms, smart home entertainment hardware platforms, and online interactive live streaming platforms, and established DT Entertainment's “platform+content+data” strategy of “platform+content+data”.
Improve the platform layout and further expand the number of users. 1) The company is continuously improving technology in the Internet video business. Through VR technology, some videos have a panoramic playback function. Users can freely switch angles of 720° to watch videos, greatly improving the user experience and enhancing user stickiness. 2) With “hardware+software+content” as the core, Storm SuperTV continues to introduce new ideas. Through the X-series VR TV created in collaboration with Storm Mirror, VR technology was successfully applied to the TV, greatly enriched Internet TV product models, successfully achieved full coverage of high and low grade products, and met the needs of people at all levels of consumers. 3) Storm Mirror actively lays out the virtual reality industry with the “hardware+content+channel” mobile VR industry ecosystem as the core. According to iUserTracker from iResearch Consulting, the number of monthly active users of Storm Mirror exceeds 1,475,000, which is the absolute number of virtual reality industry in China. 4) Participate in Storm Sports, based on communication channels and event copyright, using virtual reality technology as an entry point to quickly seize the market.
The content layout is progressing steadily. Through the establishment of Storm Pictures, the company further consolidated the content foundation of the company's “DT Entertainment” strategy and enhanced the content support of the company's existing business platforms. Storm Superbody TV has now launched six major module content modules for film, television, music, children, content e-commerce, sports, and games. It not only relies on the massive resources that Storm Video has accumulated over the years, but also shares its VR panoramic video with Storm Mirror and receives resources from content providers such as iQiyi and Aofei Animation. Furthermore, after Storm Sports was established, the focus was on sports content. Combining the relevant advantages of Storm Mirror in the VR industry, VR filming and live streaming are integrated into various events, in-depth processing of sporting events is carried out, the ability to provide sports content is enhanced, and the Internet has become an innovative channel between sports enthusiasts and sporting events.
Strengthen the construction of big data systems and enhance the synergistic benefits of various businesses. The company's big data platform has gone deep into various business modules. By collecting, analyzing and summarizing data from various platforms, accurate portraits of users of each platform are achieved; by customizing personalized content for users, the company's various business segments are more closely linked, and overall operating efficiency and monetization capacity have also been effectively improved, forming synergistic benefits of 1+1 greater than 2.
Profit forecasting and valuation. We expect the company's net profit for 2016-2017 to be 138 million yuan and 193 million yuan respectively; the corresponding EPS is 0.50 yuan and 0.70 yuan respectively. Optimistic about the company's “platform+content+data”
According to DT Entertainment's strategic layout, we believe that the company can still enjoy a certain premium valuation, giving the company 127 times PE for 16 years, corresponding to the target price of 63.5 yuan, and a purchase rating.
Risk warning. Business consolidation risks.