Introduction to this report:
The company's upstream is rich in IP resources, enhances sustainability, creates a closed loop of cultural ecosystems with multiple downstream platforms, enhances monetization capabilities, and gives a careful rating for increasing holdings for the first time.
Key points of investment:
The first coverage gave a prudent increase rating: EPS in 2019-2021 is predicted to be 0.10, 0.13, 0.18 yuan, and the growth rate is -/ 29%/37%. Referring to the valuation of companies in the interbank media sector, the company was given a target price of 5.38 yuan. Corresponding to about 54 times PE in 2019, the first coverage gave a prudent increase rating.
Expand the IP lineup through multiple upstream channels, dig deeper into development and accelerate monetization. On the one hand, the company has increased investment in scientific research and developed its own original IP to provide impetus for subsequent sustainable development; on the other hand, it has expanded resources through outreach and deepened cooperation with top international brands such as Marvel, Disney, and Nintendo to further enhance its ability to capture outstanding IPs and its forward-looking layout. The IP lineup is getting richer. It closely focuses on in-depth exploration of existing IP, refines brands of animation works, develops games, and sells peripheral products. Pan-entertainment management has been achieved, marginal resource utilization has increased, and branding transformation and monetization have been accelerated.
Downstream multi-platform and multi-channel expansion to lay out a closed loop in the cultural ecosystem. Relying on IP resources, the company continues to expand upstream and downstream of the industrial chain. Downstream has e-commerce, animation and audiovisual platforms, overseas online and offline sales channels, entertainment service channels, live streaming and reading platforms for mobile games, and has created a comprehensive product export for all links in the industry chain, and initially completed the construction of a cultural ecosystem of “own IP+ content production+content distribution and operation+new media operation+derivatives development and design+online and offline retail channels”. Relying on platform advantages, cross-selling products from different cultures can be achieved, and user stickiness and payment levels are increased.
Catalyst: A rich lineup of original IPs, in-depth development of existing IPs to create a closed loop of cultural ecosystems.
Risk warning: piracy risk, IP development falls short of expectations, cultural consumption falls short of expectations.