Recommended logic: 1) the company has the ability to make and distribute popular style movies, such as "Wolf Warriors 2", "I am not the God of Medicine", "wandering the Earth" and other popular films. The chairman of Song Song has profound resources in the industry. The company is deeply bound to well-known film creators, with producers such as du Yang and Zhang Miao who can be independent. Through the industrial fund, we have established close cooperative relations with a large number of famous directors with box office appeal, such as Chen Guofu, Urshan, Ning Hao, Guo Fan, Wu Jing, Zhang Yibai, Wen Muye and so on. 2) the company's main control project "Fengshen Trilogy"
Tentatively scheduled for the summer of 2020, with popular styles and styles. 3) after making provision for impairment of goodwill to Century Partners and Zhejiang Xinghe, the remaining goodwill in the company's account is about 1.2-220 million yuan, which fully releases the goodwill risk and focuses on film production and development.
The three installments of the Fengshen trilogy have an investment budget of 3 billion yuan and mark the Lord of the Rings to create an oriental magical blockbuster.
The first installment of the Fengshen trilogy, the company's main control project in 2020, is tentatively scheduled for the summer. The next two films have been filmed and are expected to hit the big screen in 2021 and 2022. The three films are expected to have a total investment of 3 billion yuan. The film is taken from the well-known classical demon IP Romance of God, according to the Hollywood industrial production process, with the aim of creating a Chinese version of the Lord of the Rings. Wu Ershan, the director of the Fengshen Trilogy, directed "painted skin 2" and "the Legend of the Dragon", which grossed 700 million yuan and 1.68 billion yuan respectively, both of which ranked third at the box office that year, or provide a guarantee for the quality and box office of the Fengshen trilogy. The Lord of the Rings trilogy was released in North America from 2001 to 2003, and the three films grossed $2.98 billion at the global box office. In addition to the "Fengshen Trilogy", the company plans to launch "me and my hometown" and "Bath God" in 2020. "Hello, Li Huanying", and cast films such as "Dongji Island", Dunhuang, "Demining Hero" and other films, the follow-up works are rich in reserves.
State-owned investment platform liberal arts investment or relay Huali Holdings has become the largest shareholder of the company. At the end of February 2020, the company announced that Huali Holdings, the largest shareholder of the company, intends to transfer 110 million shares of the company it directly holds to the investment M & A platform led by Liberal Arts Investment or a designated third party, accounting for 15.16% of the company's share capital. The actual controller of liberal arts investment is the Beijing State-owned assets Supervision and Administration Commission (SASAC). Previously, the superior companies of liberal arts investment have taken over media listed companies including Wen Tou Holdings, which belongs to the film industry as well as Beijing Culture. The cinema business of Wen Tou Holdings is located in the downstream of the film investment promotion of Beijing Culture, and is expected to form a strong coordination.
Profit forecast and investment advice. It is estimated that the EPS of the company from 2019 to 2021 will be-2.73max 0.44max 0.57RMB respectively.
Based on the company's blockbuster film "Fengshen Trilogy" scheduled for the summer of 2020, the company has the potential of popular style; in 2019, the company set aside the goodwill of TV series and artist brokerage business, which is expected to release risks significantly; state-owned assets are expected to buy shares to provide project, financial and other protection. We continue to be optimistic about the company's ability to make and distribute popular movies, giving it 30 times PE in 2020, with a target price of 13.20 yuan, covering it for the first time and giving it a "hold" rating.
Risk tips: box office less than expected risk; film and television industry policy tightening risk; public places flow restriction risk.