What happened: the company announced that the Royal Spaniard Club, which controls the company, intends to sell players Borja Iglesias Quintus (Borja) to Real Betis Club for 28.14 million euros.
The transfer incident once again verified the value of the club's platform. Borja was transferred to the Royal Spaniard Club on July 8, 2018, which has 100% registered interest and 100% economic interest, and both parties have set up liquidated damages of 28.14 million euros. After the completion of the transaction, the company made a net profit of 14.86 million euros (about 120 million yuan). With the previous transfer of Mario Elmoso Canseco (Elmoso for short), the company is expected to confirm a net profit of 24.22 million euros (190 million yuan).
This transfer incident is another verification of the logic of our previous recommendation. We believe that the Spaniards are the Chinese holding clubs with the best business integration, and the platform is of outstanding value-they can gather a large number of potential players through "youth training" + "external transfer" to provide systematic training and stable appearance, so that their competitive level and commercial value can be improved rapidly, and finally achieve commercial profits through the transfer of players.
The transfer of core players has a controllable impact on the competitive strength of the club, and the "Youth training Foundation" + "scouting system" ensures the sustainability of the platform operation. Some investors are worried that the loss of core players will affect the club's competitive performance, which in turn will have a negative impact on the overall performance. We believe that the operation of the club platform is sustainable to a certain extent.
1) the youth training echelon of the club sends fresh blood. This season, the club has promoted three potential players from team B, including Adria Pedrosa and Joyce Lopez. Pedrosa is only 21 years old and is worth as much as 10 million euros. In addition, there are still youth players Mark Rocca (2019 European Youth Champion, 22, worth 30 million euros), Sergidade (25 years old, 14 million euros) and Oscar Merendo (21 years old, 10 million euros).
2) the club has completed the targeted introduction. This season the club has moved to Matthias Vargas and Fernando Calero. Among them, Vargas, only 22 years old, has been selected for the Argentine national team, individual skills, can take up a number of positions; Calero, 23, was the core of La Liga Paradolid rear, defensive data better than El Moso (Calero VS. Elmoso: 1.4 per game steals, 1.2 per game; 1.5 per game, 1.2 per game; 0.4 per game, 0.6).
Profit forecast and investment advice. Taking into account the changes in club performance, we increase the target market value to 9.6 billion yuan (using segment valuation method), corresponding to the target price of 7.72 yuan per share, equivalent to 23 times valuation, to maintain the "buy" rating.
Risk tips: the risk of macroeconomic recession, the risk of industrial policy change, the risk of club operation or falling short of expectations, the risk of game business development or falling short of expectations, the risk of overseas operation.