Company profile: high-quality film and television content companies, transformation to promote revenue, profit growth. Beijing Culture was listed on the Shenzhen Stock Exchange in 1998. At the initial stage of listing, the company mainly engaged in scenic spot tourism business. Since 2013, the company has acquired Ferris wheel cultural media, century partner cultural media, Xinghe cultural brokerage and other companies to complete the transformation of the film and television entertainment industry layout. In the first three quarters of 2019, the company achieved revenue of 700 million yuan, an increase of 99.56% over the same period last year, and a net profit of 120 million yuan, an increase of 152.76% over the same period last year. From 2014 to 2018, the company's revenue and non-return net profit grew at a compound rate of 30 per cent and 65 per cent respectively.
Film business: continue to create popular films. The company's film business mainly depends on its subsidiary Ferris Wheel Media. In recent years, the company has successfully invested in and issued many excellent film and television works, such as "Wolf Warriors 2", "I am not the God of Medicine", "the unknown", "wandering the Earth" and so on. We believe that the sustained and stable output capacity of popular styles is the company's core competitiveness. The year 2020 is the company's film year. The first film in the company's blockbuster trilogy has been filmed and is currently in a state of post-production. We think that the series of films are of great significance to the company. First of all, there are three films in the series, which are expected to be released in 2020-2022, and have a good sustainability to the company's future performance. Secondly, "Wolf Warriors 2" and other early popular style works, the company is to participate in or publicity distribution, "Fengshen" series for the company's main control of giant films, a high proportion of investment, we think that the company's performance flexibility, and as a big IP works, in addition to box office revenue, we expect the future is expected to develop new media copyright and IP licensing and other related revenue. In addition to "Fengshen", "749 Bureau" directed by Lu Chuan, "Tropical past" produced by Ning Hao, and "me and my hometown" sister piece "me and my hometown" are all expected to be released in 2020.
TV series and artist brokerage business: the business is promoted in an orderly manner, enriching the content of the film and television section. The company's TV series and online drama section has been adhering to the development line based on the original and adapted IP of the screenwriter, director and producer studio, and maintains the creative concept of creating high-quality dramas. The costume drama "Daming Fenghua" produced by the company has been successfully broadcast, and key plays such as "Moonlight Blade", "Jiangshan do not regret" and "Love returns" are still in progress.
In the field of artist brokerage, the company has Lu Yi, Guo Jingfei and many other entertainers. We believe that in the future, the company will create a more innovative artist industry model, covering artist training, artist brokerage, commercial advertising and other artist industry full-chain business model, to provide strong resource support for other sectors of the company's business.
Profit forecast and valuation analysis. We estimate that the EPS of the company from 2019 to 2021 is-2.74,0.49 and 0.58 yuan respectively. The company suffered a substantial loss in net profit in 2019, mainly due to impairment of assets such as goodwill and accounts receivable. 2020 is the year of the company's film and television. We believe that the company's blockbuster films "the first movie", "the Tropical past" and "749 Bureau" are all expected to be released in 2020, leading to high revenue and profit growth. With reference to comparable companies, we give the company 25-30 times dynamic PE in 2020, corresponding to a reasonable value range of 12.25-14.70 yuan per share. For the first time, the coverage gives the company a "better than the market" rating.
Risk hint. Film and television projects are uncertain; industry policies are tightened.