Main points of investment
Event: Huasu Media released its 2019 half-yearly report. In the first half of the year, the company achieved revenue of 1.65 billion yuan, an increase of 5.76% over the same period last year, a net profit of 405 million yuan, an increase of 27.68% over the same period last year, and a non-net profit of 282 million yuan, an increase of 9.96%. Q2 single-quarter revenue increased by 5.65% year-on-year, and home net profit increased by 9.15% compared with the same period last year.
The growth rate of income was stable, and the net profit increased significantly. The company's revenue in the first half of the year increased by 5.76% over the same period last year, and its net profit increased by 27.68% compared with the same period last year. The substantial increase in return net profit is mainly due to the recognition of 121 million of fair value changes in investment in financial assets such as Guiyang and Guangzhou network stocks.
Gross profit and net interest rate are basically stable. The company's first-half gross profit margin was 38.95%, down 1.54pct from the same period last year; net profit was 24.52%, up 0.05pct from the same period last year.
The operating cash flow is good and the monetary funds are abundant. In the first half of 2018, the company's operating cash flow was 608 million yuan, an increase of 47.82% over the same period last year, and monetary funds were 5.651 billion yuan. Abundant cash flow provides full guarantee for the future development of the company.
The company's OTT business is growing rapidly, and there is much room for improvement in gross profit margin. The company's Internet TV public network business revenue reached 231 million in the first half of the year, an increase of 41.07% over the same period last year. The company covers more than 100 million Internet TV terminals and activates more than 80 million on-demand users. Internet TV business is in a period of rapid development, the company holds the advantage of scarce license to establish a strong competitive advantage. At present, the gross profit margin of this business is only 8.55%, which has a lot of room for improvement.
Digital TV business declined, while broadband and interactive TV business remained stable. In the first half of the year, the company's revenue from digital TV business was 313 million, down 6.48% from the same period last year; revenue from broadband business was 349 million, down 1.31% from the same period last year; and revenue from interactive TV was 198 million, up 2.93% from the same period last year.
The income of cable TV business, new media service, broadband and smart city business are tripartite. The company's three business revenues continue to account for 1/3 each. The balanced business composition enables the company to maintain a continuous and steady growth of business performance for many years in the environment of the loss of users in the industry and severe market competition.
Profit forecast: we predict that Huasu Media will achieve revenue of 3.607 billion yuan and 38. 5% respectively from 2019 to 2021.
2.4 billion yuan, 4.052 billion yuan, an increase of 4.99%, 5.99% and 5.97% over the same period last year; the net profit of returning to the mother was 732 million yuan, 784 million yuan and 827 million yuan respectively, an increase of 13.66%, 7.04% and 5.57% over the same period last year; and the corresponding EPS from 2019 to 2021 was 0.47,0.51,0.54 yuan respectively.
Risk hints: the risk of industrial policy change, the impact of new technology, the intensification of competition, and the downward preference for market risk.