Event: according to the company's three-quarter report, the operating income in the first three quarters of 2019 was 2.1 billion yuan, down 8.1% from the same period last year, and the net profit was 340 million yuan, an increase of 59.6% over the same period last year. Ting Q3 achieved operating income of 940 million yuan in a single quarter, a substantial increase of 55.9% over the same period last year. The net profit of returning to the mother was 210 million yuan, an increase of 199% over the same period last year.
The increase in profitability of the sports business led the overall performance to reach the upper limit of the forecast. During the reporting period, the company's business was running well, and Q3 performance increased significantly, reaching the upper limit of the performance forecast. From a business point of view, the company's original game works continue to contribute rich water, the launch of new works to provide future performance guarantee. The profitability of the sports business has greatly improved, with a good growth momentum in broadcasting revenue and sponsorship revenue, and a net profit of at least 190 million yuan has been gained by selling players such as Borja Iglesias and Mario Elmoso.
We stick to the existing point of view and are optimistic about the long-term value of the Spaniard club.
1) the Spaniard is one of the best Chinese-controlled overseas clubs with the best business integration. After 3 years of painstaking operation of the listed company, the operation has improved significantly. The net assets of the club have increased from 400 million yuan at the end of 2016 to 1.24 billion yuan at present, and the net profit of returning mother has also increased from 29.44 million yuan in 2016 to 100 million yuan in 2018.
2) the value of the club platform is in the rising stage, which can be paid attention to. Relying on the good "youth training foundation" + "scouting system", the club has formed a "benign player flow" operation mode, which can realize the win-win situation of competitive strength-commercial value. At present, the total value of the club's first-team players has reached 150 million euros, which has made great progress compared with the previous 5000 million euros, which is not only an important embodiment of the value of the club platform, but also a solid foundation for further raising the value of the platform.
3) Spaniards are in a depression of commercial value and still have great potential for development. "Wu Lei" effect, the Spanish club, La Liga in the domestic attention has been greatly improved. At present, the club and LeSports, Migu, iFLYTEK and other enterprises to achieve cooperation, its commercial value still has a lot of room for development.
4) the view that the Spaniard is the preferred base for Chinese players to study abroad remains the same. We can see that Wu Lei has achieved a great improvement in technical and tactical literacy and physical quality through less than a year of La Liga field training, which shows that "studying abroad" is an effective way to improve the level of domestic players. Compared with other European leagues, La Liga transfer system is more relaxed, the foundation of the Spaniards has been built, which is an excellent soil for Chinese players to stay abroad.
Profit forecast and investment advice. Chinese football industry is in a golden rising period. As the vanguard of Chinese-owned overseas clubs, the long-term value of Spaniards clubs is expected to be gradually recognized. We maintain the target price of 7.72 yuan per share and maintain the "buy" rating.
Risk hints: the risk of macroeconomic recession, the risk of industrial policy change, the risk of club operation or less than expected, the risk of uncertainty of competitive sports, the risk of game business development or not as expected.